CEVAP:

The purchase of an intangible asset should be treated as a capital expenditure and recorded at acquisition cost. In other words, the cost of intangible asset includes all acquiring expenditures and the necessary expenditures to bring the asset to its intended use. Some types of intangible assets can also be internally developed. The costs of these intangible assets can be measured by costs like registration fees and attorney’s fee. When an intangible asset is internally developed, it may be very difficult to evaluate it. These types of costs are generally recorded as a period expense.

If an intangible asset has a limited life, its cost should be allocated (amortized) over its useful life. Intangible assets with indefinite lives should not be amortized. Companies normally use the straight-line method for amortizing intangible assets.