Ministry of Finance, Enterprise Accounting Guidelines - Intangible Assets

Issued: January 18 2001
Effective: January 1 2001
Applicability: For the purposes of these Guidelines, "intangible assets" means long-term non-monetary assets that have no tangible form, including identifiable intangible assets such as patent rights, copyrights, leaseholds and concession rights and non-identifiable intangible assets such as goodwill (Section Three). These Guidelines have retrospective effect only on the allowance for devaluation in respect of intangible assets acquired prior to the effective date hereof (Section 24).

Main contents: The Guidelines set out the provisions regarding the recognition, calculation, amortization, devaluation, writing off and disclosure of intangible assets. It is provided that an intangible asset is recognizable only if its economic benefit is likely to flow into the enterprise and its cost can be reliably measured (Section Four). Goodwill created by the enterprise shall not be recognized (Section Seven). Acquired intangible assets shall be booked on the basis of the actual cost of acquisition (Section Eight). Those invested into an enterprise in connection with an initial share offering shall be booked on the value on the book of the investor (Section Ten). Those developed and applied for by the enterprise itself shall be booked on the basis of the registration fee and legal fees incurred in the application (Section 13). Costs of intangible assets shall be amortized during their expected useful life, which shall be determined by reference to their benefit years or validity years or, in the absence of both, to a maximum of ten years (Section 15). Allowance for devaluation or write off may be required in circumstances such as obsolescence of the assets because of new technology (Sections 16 and 20).

clp reference:3100/01.01.18(2)promulgated:2001-01-18effective:2001-01-01