Other intangible assets may be so amortized and deducted from earnings in the determination of income tax liability. Even in the simplest of times, thus, a firm can attain income tax savings to the extent that it can successfully classify intangible assets as something other than goodwill. Thus, it is entirely possible that the GEC Ltd. auditors reclassified some portion of the goodwill account of AEI Ltd. to some other form of intangible asset, and then effected further adjustments to reclassify some of that amount from an asset to an expense.
The issue of accounting for intangible assets has expanded in several directions. One of these directions concerns branded products. Some firms claim that the establishment of brands creates an intangible value for a company, and that such value should be able to be amortized for tax purposes. In turn, some auditors (both private and governmental) contend that the value of a brand is a form of goodwill, and as such may not be amortized and deducted from income taxes. In the traditional conception of goodwill, the claim is that a brand has no recordable value until it is sold, and that when it is sold it reflects goodwill that is neither amortizable nor tax deductible. Many firms contend, however, that brands have a current and intangible value. Thus, it is also within the realm of possibility that GEC Ltd. judged that some brand owned by AEI Ltd. possessed an intangible value that could be amortized and deducted.
Accounting For Research and Development
All research and development costs not directly reimbursable by others generally should be charged to expense when incurred. Business enterprises engaged in the development of computer software, however, question the inclusion or exclusion of the development of various types of computer software within the definition of research and development. The contention is that because