Intangibles assets Definition : An asset that is not physical in nature are created daily by operating transaction or during purchased it.

Acquiring intangible asset Any company can acquire intangible asset in three several way. 1- purchased 2- internally generated 3-government grants

1_ Purchase of intangible assets The main characteristics Created when the company purchased another one entity . And this type name is ‘goodwill’ . Recorded in balance sheet. Be considered as a depreciable asset Example for created goodwill (in this way) . If’ x ‘company decide to purchase ‘y’ entity ‘ so Must determine the fair value of the company and then calculate the goodwill. Goodwill = the cost of investment – ( f.v for asset – f.v liability ) If the company paid 220000 dollar to purchased y company and after evaluation the asset fund the fair value for asset 210000 dollar and the fair value for liability 40000 dollar what Is the goodwill for this transaction ? = 220000 – ( 210000 – 40000) The goodwill = 500000 dollar Or during purchase it individual like copyright or franchises etc.

2_ Internally generated And in this way the company create the intangible asset through operational (self –created) . Example of intangible asset consisting internally 1- customer list 2-brands 3-patent 4- Copyrights 5- Management experience and efficiency

3_government grants It is a grant. Provided by the country of the company to encourage them to set up branches in the country or improving their performance. Examples include the right to a monopoly of the Jordan Fast link to encourage them to set up a mobile communication network in Jordan in 1994. And based on the lack of a license for other companies up to 5 years.

Accounting for intangible asset IAS 38 Must have the following characteristics : Has no physical existence, identifiable, and is expected to generate future economic benefits. Conditions to be met in intangible assets : 1- Determinable : This means that it can be determined if it was possible to calculate the cost independently. If it could be separated from the company or sell it independently or within another asset .Or when it arises from contractual or other legal rights . 2- Control: The company must have the right to obtain future benefits of this asset. 3- Future economic benefits: These benefits shall be either A- get revenue in the event of the sale of products or services . B - or reduction of production costs or operating expenses .

Accounting for intangible assets Identifiable intangibles Unidentifiable intangibles As IAS38 states, an asset is identifiable when the firm has control over the asset, or it can be separated from the other assets of the firm. To be classed as separable, the asset must be ‘capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged’. In this case it is the recognition of an asset. Shown in the balance sheet and be met to apply all accounting operations . According to the previously mentioned item must be independent in terms of cost and the possibility of measurement. So this type Don't met (conditions recognition )by the International Accounting Standard. Don’t show in the balance sheet (not recorded ) .

Measurement after recognition We have two models Cost model Revaluation model After initial recognition, intangible asset recorded at the price of its cost less any accumulated amortization and any accumulated impairment losses. After initial recognition, intangible asset recorded revalued amount, which is the fair value at the date of the revaluation less any accumulated amortization and any subsequent accumulated impairment losses. Until re-evaluation in accordance with this standard, fair value is determined by reference to one of active markets. Re-evaluation should be conducted on a regular basis so that you are recognized for the asset value does not vary at the end of the reporting period is fundamentally different from its fair value.

Analyzing intangible Intangible assets are typically expensed according to their respective life expectancy. Intangible assets have either an identifiable or indefinite useful life. Those with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever one is shorter. Intangible assets with indefinite useful lives are reassessed each year for impairment. If an impairment has occurred, then a loss must be recognized. An impairment loss is determined by subtracting the asset's fair value from the asset's book or carrying value. Trademarks and goodwill are examples of intangible assets with indefinite useful lives. Goodwill has to be tested for impairment rather than amortized. If impaired, goodwill is reduced and loss is recognized in the Income statement . Financial analyst and auditor must be detailed focus on this segment. According to the Materiality compared with other items. In order to not getting earnings management.

Unrecorded intangible Despite the importance of intangible assets and the cost incurred of the company and the benefits expected to be realized, but the international standard No. 38. Did not allow the companies to recognize it . except within the previous conditions that are difficult to apply in some cases. Therefore, we'll show some of the cases that are not recognized and that controversial. If a company (company A) received a patent through their own work, though it has value, it does not show up on its balance sheet as an intangible asset. However, if company A sells this patent to company B, it will show up on company B’ balance sheet as an intangible asset. The same applies to brand names, trade secrets etc. For instance, Coca-Cola’s brand is extremely valuable, but the brand does not appear on its balance sheet, because the brand was never acquired. Intangibles acquired are on balance sheet at fair value. Internally developed goodwill trade name to the customer list etc . however are not reflected on the balance sheet.

The common types of intangible asset 1- Goodwill : the most common in this group . And the goodwill reflects the company's ability to expose logistics base for its competitors, leading to higher sales and thus profit from the rest of the competitors. It is possible that consists of the internal operations of the company, or through the purchase of existing company owns this item. This item gives the company's market power. For example, if you look at the balance sheet for Colgate Palmolive the goodwill have a substance value with big balance and in the Campbell soup . In appendix (A)In the latter part of the book . It is possible to note the size of goodwill and other intangible assets of the giant co like Colgate . Through the study of developments on these items changes over the past 3 years. The following figure illustrates these details. The rate of goodwill in 2014 = 17.14% Total intangible asset with asset = 27.63%

2- trademark : is a recognizable sign, design or expression which identifies products or services of a particular source from those of others. The trademark owner can be an individual, business organization, or any legal entity. A trademark may be located on a package, a label, a voucher or on the product itself. 3- Intellectual capital or knowledge :and is intended collective knowledge or implicit (example, personal experiences) and that may not be documented and stored it in the minds of individuals working in an enterprise, organization or society, it reflects the things that are not tangible, unlike fixed assets . 4- Patent: The right is a special privilege granted to the inventor formally in a specific period of time in exchange for allowing the public access to the invention. In general, the right granted to the owner of the invention is to prevent others from making, using or selling or displaying the invention without the consent of the patent holder. 5 –Franchise : It is right to use the company's name and brand in agreement with the company owning the right. For a fee, in some cases, in addition to a percentage of profits.

Period Ending Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Assets Current Assets Cash And Cash Equivalents 1,089,000   962,000   884,000   Short Term Investments -   Net Receivables 1,552,000   1,636,000   1,668,000   Inventory 1,382,000   1,425,000   1,365,000   Other Current Assets 840,000   908,000   639,000   Total Current Assets 4,863,000   4,931,000   4,556,000   Long Term Investments Property Plant and Equipment 4,080,000   4,083,000   3,842,000   Goodwill 2,307,000   2,474,000   2,500,000   Intangible Assets 1,413,000   1,496,000   1,499,000   Accumulated Amortization Other Assets 720,000   924,000   905,000   Deferred Long Term Asset Charges 76,000   77,000   92,000   Total Assets 13,459,000   13,985,000   13,394,000