# ASC 350-30-55: Intangibles—Goodwill and Other — General Intangibles Other Than Goodwill — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/350/30/#55-implementation-guidance-and-illustrations)

Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.

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## ASC 350-30-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/350/30/#55-implementation-guidance-and-illustrations)

SEC content: no

#### Implementation Guidance

##### [350-30-55-1](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1)

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This implementation guidance addresses the determination of whether or not an intangible asset meets the definition of a defensive intangible asset. A defensive intangible asset could include any of the following:

1.  a
    
    An asset that the entity will never actively use
    
2.  b
    
    An asset that will be used by the entity during a transition period when the intention of the entity is to discontinue the use of that asset.

##### [350-30-55-1A](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1A)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [350-30-55-1B](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1B)

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The determination of whether an intangible asset is a defensive intangible asset is based on the intentions of the reporting entity and that determination may change as the reporting entity's intentions change. For example, an intangible asset that was accounted for as a defensive intangible asset on the date of acquisition will cease to be a defensive asset if the entity subsequently decides to actively use the asset). Examples 9C and 9D (see paragraphs

[350-30-55-28G through 55-28L](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28G)

) illustrate the determination of whether an acquired intangible asset is a defensive intangible asset.

##### [350-30-55-1C](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1C)

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This paragraph provides implementation guidance on paragraph [350-30-35-3(d)](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-3). For a recognized intangible asset, there might continue to be a difference between the useful life of the asset and the period of expected cash flows used to measure the fair value of the asset. However, that difference likely will be limited to situations in which the entity's own assumptions about the period over which the asset is expected to contribute directly and indirectly to the future cash flows of the entity are different from the assumptions market participants would use in pricing the asset. In those situations, it is appropriate for the entity to use its own assumptions because amortization of a recognized intangible asset should reflect the period over which the asset will contribute both directly and indirectly to the expected future cash flows of the entity.

#### Example 1: Acquired Customer List

##### [350-30-55-2](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-2)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-3)

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A direct-mail marketing entity acquired a customer list and expects that it will be able to derive benefit from the information on the acquired customer list for at least one year but for no more than three years.

##### [350-30-55-4](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-4)

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The customer list would be amortized over 18 months, management's best estimate of its useful life, following the pattern in which the expected benefits will be consumed or otherwise used up. Although the acquiring entity may intend to add customer names and other information to the list in the future, the expected benefits of the acquired customer list relate only to the customers on that list at the date of acquisition (a closed-group notion). The customer list would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 2: Acquired Patent

##### [350-30-55-5](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-5)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-6](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-6)

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An acquired patent expires in 15 years. The product protected by the patented technology is expected to be a source of cash flows for at least 15 years. The reporting entity has a commitment from a third party to purchase that patent in 5 years for 60 percent of the fair value of the patent at the date it was acquired, and the entity intends to sell the patent in 5 years.

##### [350-30-55-7](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-7)

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The patent would be amortized over its five-year useful life to the reporting entity following the pattern in which the expected benefits will be consumed or otherwise used up. The amount to be amortized is 40 percent of the patent's fair value at the acquisition date ([residual value](https://asc.understandingaccounting.org/glossary/r/#residual-value "The estimated fair value of an intangible asset at the end of its useful life to an entity, less any disposal costs.") is 60 percent). The patent would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 3: Acquired Copyright

##### [350-30-55-8](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-8)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-9](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-9)

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An acquired copyright has a remaining legal life of 50 years. An analysis of consumer habits and market trends provides evidence that the copyrighted material will generate cash flows for approximately 30 more years.

##### [350-30-55-10](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-10)

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The copyright would be amortized over its 30-year estimated useful life following the pattern in which the expected benefits will be consumed or otherwise used up and reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 4: Acquired Broadcast License Deemed to Have an Indefinite Life

##### [350-30-55-11](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-11)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-12](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-12)

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An acquired broadcast license expires in five years. The broadcast license is renewable every 10 years if the entity provides at least an average level of service to its customers and complies with the applicable Federal Communications Commission (FCC) rules and policies and the FCC Communications Act of 1934. The license may be renewed indefinitely at little cost and was renewed twice prior to its recent acquisition. The acquiring entity intends to renew the license indefinitely, and evidence supports its ability to do so. Historically, there has been no compelling challenge to the license renewal. The technology used in broadcasting is not expected to be replaced by another technology any time in the foreseeable future. Therefore, the cash flows from that license are expected to continue indefinitely.

##### [350-30-55-13](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-13)

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The broadcast license would be deemed to have an indefinite useful life because cash flows are expected to continue indefinitely. Therefore, the license would not be amortized until its useful life is deemed to be no longer indefinite. The license would be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

.

#### Example 5: Acquired Broadcast License Deemed to Have a Finite Life

##### [350-30-55-14](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-14)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-15](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-15)

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Regarding the broadcast license acquired in Example 4 (see paragraph [350-30-55-11](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-11)), the FCC subsequently decides that it will no longer renew broadcast licenses, but rather will auction those licenses. At the time the decision is made, the broadcast license has three years until it expires. The cash flows from that license are expected to continue until the license expires.

##### [350-30-55-16](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-16)

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Because the broadcast license can no longer be renewed, its useful life is no longer indefinite. Thus, the acquired license would be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

. The license would then be amortized over its remaining three-year useful life following the pattern in which the expected benefits will be consumed or otherwise used up. Because the license will be subject to amortization, in the future it would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 6: Acquired Airline Route

##### [350-30-55-17](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-17)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-18](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-18)

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An acquired airline route authority from the United States to the United Kingdom expires in three years. The route authority may be renewed every five years, and the acquiring entity intends to comply with the applicable rules and regulations surrounding renewal. Route authority renewals are routinely granted at a minimal cost and have historically been renewed when the airline has complied with the applicable rules and regulations. The acquiring entity expects to provide service to the United Kingdom from its hub airports indefinitely and expects that the related supporting infrastructure (airport gates, slots, and terminal facility leases) will remain in place at those airports for as long as it has the route authority. An analysis of demand and cash flows supports those assumptions.

##### [350-30-55-19](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-19)

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Because the facts and circumstances support the acquiring entity's ability to continue providing air service to the United Kingdom from its U.S. hub airports indefinitely, the intangible asset related to the route authority is considered to have an indefinite useful life. Therefore, the route authority would not be amortized until its useful life is deemed to be no longer indefinite and would be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

.

#### Example 7: Acquired Trademark Deemed to Have an Indefinite Useful Life

##### [350-30-55-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-20)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-21](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-21)

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An acquired trademark that is used to identify and distinguish a leading consumer product has been a market-share leader for the past eight years. The trademark has a remaining legal life of 5 years but is renewable every 10 years at little cost. The acquiring entity intends to continuously renew the trademark, and evidence supports its ability to do so. An analysis of product life cycle studies; market, competitive, and environmental trends; and brand extension opportunities provides evidence that the trademarked product will generate cash flows for the acquiring entity for an indefinite period of time.

##### [350-30-55-22](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-22)

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The trademark would be deemed to have an indefinite useful life because it is expected to contribute to cash flows indefinitely. Therefore, the trademark would not be amortized until its useful life is no longer indefinite. The trademark would be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

.

#### Example 8: Acquired Trademark Determined to Have Reduced Cash Flows

##### [350-30-55-23](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-23)

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This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-24](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-24)

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A trademark that distinguished a leading consumer product was acquired 10 years ago. When it was acquired, the trademark was considered to have an indefinite useful life because the product was expected to generate cash flows indefinitely. During the annual impairment test of the intangible asset, the entity determines that unexpected competition has entered the market that will reduce future sales of the product. Management estimates that cash flows generated by that consumer product will be 20 percent less for the foreseeable future; however, management expects that the product will continue to generate cash flows indefinitely at those reduced amounts.

##### [350-30-55-25](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-25)

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Effective as of: not established by retrieval timestamps.


As a result of the projected decrease in future cash flows, the entity determines that the estimated fair value of the trademark is less than its carrying amount, and an impairment loss is recognized. Because it is still deemed to have an indefinite useful life, the trademark would continue to not be amortized and would continue to be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

.

#### Example 9: Acquired Trademark No Longer Deemed to Have an Indefinite Life

##### [350-30-55-26](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-26)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-27](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-27)

Pending content: no

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A trademark for a line of automobiles was acquired several years ago in an acquisition of an automobile entity. The line of automobiles had been produced by the acquired entity for 35 years with numerous new models developed under the trademark. At the acquisition date, the acquiring entity expected to continue to produce that line of automobiles, and an analysis of various economic factors indicated there was no limit to the period of time the trademark would contribute to cash flows. Because cash flows were expected to continue indefinitely, the trademark was not amortized. Management recently decided to phase out production of that automobile line over the next four years.

##### [350-30-55-28](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Because the useful life of that acquired trademark is no longer deemed to be indefinite, the trademark would be tested for impairment in accordance with paragraphs

[350-30-35-18 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-18)

. The carrying amount of the trademark after adjustment, if any, would then be amortized over its remaining four-year useful life following the pattern in which the expected benefits will be consumed or otherwise used up. Because the trademark will be subject to amortization, in the future it would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 9A: Acquired Technology License That Renews Annually

##### [350-30-55-28A](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28A)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-28B](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28B)

Pending content: no

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Effective as of: not established by retrieval timestamps.


An exclusive, annually renewable technology license with a third party is acquired by an entity that has made significant progress in developing next-generation technology for digital video products. The acquiring entity believes that in two years, after it has completed developing its next-generation products, the acquired technology license will be obsolete because customers will convert to the acquiring entity's products. Market participants, however, are not as advanced in their development efforts and are not aware of the acquiring entity's proprietary development efforts. Thus, those market participants would expect the technology license to be obsolete in three years. The acquiring entity determines that the fair value of the technology license using 3 years of cash flows is $10 million, consistent with the highest and best use of the asset by market participants.

##### [350-30-55-28C](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28C)

Pending content: no

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Effective as of: not established by retrieval timestamps.


In applying paragraph [350-30-35-3(d)](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-3), the acquiring entity would consider its own historical experience in renewing or extending similar arrangements. In this case, the acquiring entity lacks historical experience in renewing or extending similar arrangements. Therefore, in accordance with that paragraph, the entity would consider the assumptions that a market participant would use consistent with the highest and best use of the technology license. However, because the acquiring entity expects to use the technology license until it becomes obsolete in two years, it must adjust the market participants' assumptions for the entity-specific factors in paragraph [350-30-35-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-3), specifically item (a), which requires consideration of the entity's expected use of the asset. As a result, the technology license would be amortized over a two-year period. The technology license would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 9B: Acquired Customer Relationship

##### [350-30-55-28D](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28D)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-1 through 35-20](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-1)

.

##### [350-30-55-28E](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28E)

Pending content: no

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Effective as of: not established by retrieval timestamps.


An insurance entity acquired 50 customer relationships operating under contracts that are renewable annually. The acquiring entity determines that the fair value of the customer relationship asset is $10 million, considering assumptions (including turnover rate) that a market participant would make consistent with the highest and best use of the asset by market participants. An income approach was used to determine the fair value of the acquired customer relationship asset.

##### [350-30-55-28F](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28F)

Pending content: no

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Effective as of: not established by retrieval timestamps.


In applying paragraph [350-30-35-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-3), the acquiring entity would consider its own historical experience in renewing or extending similar customer relationships. In this case, the acquiring entity concludes that its customer relationships are dissimilar to the acquired customer relationships and, therefore, the acquiring entity lacks historical experience in renewing or extending similar arrangements. Accordingly, the acquiring entity considers turnover assumptions that market participants would make about the renewal or extension of the acquired customer relationships or similar arrangements. Without evidence to the contrary, the acquiring entity expects that the acquired customer relationships will be renewed or extended at the same rate as a market participant would expect, and no other factors would indicate a different useful life is appropriate. Thus, absent any other of the entity-specific factors in paragraph [350-30-35-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-3), in determining the useful life for amortization purposes, the entity shall consider the period of expected cash flows used to measure the fair value of the asset. The customer relationships would be reviewed for impairment under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 9C: Trade Name

##### [350-30-55-28G](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28G)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the application of the implementation guidance in paragraphs [350-30-55-1 through 55-1B](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1) on the determination of whether an intangible asset meets the definition of a defensive intangible asset.

##### [350-30-55-28H](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28H)

Pending content: no

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Entity A, a consumer products manufacturer, acquires an entity that sells a product that competes with one of Entity A's existing products. Entity A plans to discontinue the sale of the competing product within the next six months, but will maintain the rights to the trade name, at minimal expected cost, to prevent a competitor from using the trade name. As a result, Entity A's existing product is expected to experience an increase in market share. Entity A does not have any current plans to reintroduce the acquired trade name in the future.

##### [350-30-55-28I](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28I)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Because Entity A does not intend to actively use the acquired trade name, but intends to hold the rights to the trade name to prevent others from using it, the trade name meets the definition of a defensive intangible asset.

#### Example 9D: Internally Developed Software

##### [350-30-55-28J](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28J)

Pending content: no

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Effective as of: not established by retrieval timestamps.


This Example illustrates the application of the implementation guidance in paragraphs [350-30-55-1 through 55-1B](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-1) on the determination of whether an intangible asset meets the definition of a defensive intangible asset.

##### [350-30-55-28K](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28K)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Entity A acquires a group of assets, one of which is billing software developed by the selling entity for its own use. After a six month transition period, Entity A plans to discontinue use of the internally developed billing software. In valuing the billing software in connection with the acquisition, Entity A determines that a market participant would use the billing software, along with other assets in the asset group, for its full remaining economic life—that is, Entity A does not intend to use the asset in a way that is at its highest and best use. Due to the specialized nature of the software, Entity A does not believe the software could be sold to a third party without the other assets acquired.

##### [350-30-55-28L](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-28L)

Pending content: no

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Although Entity A does not intend to actively use the internally developed billing software after a six month transition period, Entity A is not holding the internally developed software to prevent others from using it. Therefore, the internally developed software asset does not meet the definition of a defensive intangible asset.

#### Example 10: Easements

##### [350-30-55-29](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-29)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-21 through 35-24](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-21)

.

##### [350-30-55-30](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-30)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Entity A is a distributor of natural gas. Entity A has two self-constructed pipelines, the Northern pipeline and the Southern pipeline. Each pipeline was constructed on land for which Entity A owns perpetual easements that Entity A evaluated under Topic 842 and determined do not meet the definition of a [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") under that Topic (because those easements are perpetual and, therefore, do not convey the right to use the underlying land for a period of time). The Northern pipeline was constructed on 50 easements acquired in 50 separate transactions. The Southern pipeline was constructed on 100 separate easements that were acquired in a business combination and were recorded as a single asset. Although each pipeline functions independently of the other, they are contained in the same [reporting unit](https://asc.understandingaccounting.org/glossary/r/#reporting-unit "The level of reporting at which goodwill is tested for impairment. A reporting unit is an operating segment or one level below an operating segment (also known as a component)."). Operation of each pipeline is directed by a different manager. There are discrete, identifiable cash flows for each pipeline; thus, each pipeline and its related easements represent a separate asset group under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10. While Entity A has no current plans to sell or otherwise dispose of any of its easements, Entity A believes that if either pipeline was sold, it would most likely convey all rights under the easements with the related pipeline.

##### [350-30-55-31](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-31)

Pending content: no

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Based on an evaluation of the circumstances, Entity A would have two units of accounting for purposes of testing the easements for impairment-the collection of easements supporting the Northern pipeline and the collection of easements supporting the Southern pipeline. The 50 easements supporting the Northern pipeline represent a single unit of accounting as evidenced by the fact that they are collectively used together in a single asset group (see paragraphs

[360-10-35-23 through 35-26](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-23)

), if acquired in a single transaction, they would have been recorded as one asset, and if sold, they would likely be sold as a group with the related pipeline. For the same reasons, the easements supporting the Southern pipeline would represent a single unit of accounting.

##### [350-30-55-32](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-32)

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Because the collective land easements underlying the Northern and Southern pipelines generate cash flows independent of one another and are used exclusively by separate asset groups under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10, they should not be combined into a single unit of accounting.

#### Example 11: Trade Name

##### [350-30-55-33](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-33)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-21 through 35-24](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-21)

.

##### [350-30-55-34](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-34)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Entity B purchases an international vacuum cleaner manufacturer, Entity A, which sells vacuums under a well-known trade name. The operations of Entity A are conducted through separate legal entities in three countries and each of those legal entities owns the registered trade name used in that country. When the business combination was recorded, Entity B recorded three separate intangible trade name assets because separate financial statements are required to be prepared for each separate legal entity. There are separate identifiable cash flows for each country, and each country represents an asset group under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10. A single brand manager is responsible for the Entity A trade name, the value of which is expected to be recovered from the worldwide sales of Entity A's products.

##### [350-30-55-35](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-35)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Based on an evaluation of the circumstances, three separately recorded trade name assets would be combined into a single unit of accounting for purposes of testing the acquired trade name for impairment. The three registered trade names were acquired in the same business combination and, absent the requirement to prepare separate financial statements for subsidiaries, would have been recorded as a single asset. The trade name is managed by a single brand manager. If sold, Entity C would most likely sell all three legally registered trade names as a single asset.

#### Example 12: Brands

##### [350-30-55-36](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-36)

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Effective as of: not established by retrieval timestamps.


This Example illustrates the guidance in paragraphs

[350-30-35-21 through 35-24](https://asc.understandingaccounting.org/asc/350/30/#350-30-35-21)

.

##### [350-30-55-37](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-37)

Pending content: no

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Effective as of: not established by retrieval timestamps.


Entity Z manufactures and distributes cereals under two different brands, Brand A and Brand B. Both brands were acquired in the same business combination. Entity Z recorded two separate intangible assets representing Brand A and Brand B. Each brand represents a group of complementary indefinite-lived intangible assets including the trademark, the trade dress, and a recipe. Brand A has two underlying trade names for its Honey and Cinnamon cereals. The trade name and recipe of Cinnamon were internally generated subsequent to the acquisition of Brand A. Sales of Honey have decreased while sales of Cinnamon have increased over the past several years. Despite the decline in sales of Honey, the combined sales of Honey and Cinnamon have increased at the levels expected by management. Sales of Brand B also have increased at expected levels. There are discrete cash flows for Honey, Cinnamon, and Brand B, and each represents a separate asset group under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10. Both Honey and Cinnamon are managed by one brand manager. A separate brand manager is responsible for Brand B; however, there are some shared resources used by these groups, such as procurement. While Entity Z has no current plans to sell its brands or exit the cereal business, it believes if it ever did, it would exit the cereal business in its entirety.

##### [350-30-55-38](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-38)

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Based on an evaluation of the circumstances, Entity Z would have two units of accounting for purposes of testing the acquired brands for impairment. Brand A's purchased Honey and internally generated Cinnamon trademarks should be combined as a single unit of accounting for purposes of impairment testing. The intangible asset associated with the Cinnamon trademark is simply a variation of the previously acquired Brand A Honey trademark. Although they are associated with different asset groups, they are managed by a single brand manager. Entity Z would consider Brand B to be a separate unit of accounting for purposes of testing impairment because that brand is managed separately from Brand A and is used exclusively by a separate asset group under the Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10.

#### Example 13: Illustration of Disclosure Requirements

##### [350-30-55-39](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-39)

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This Example illustrates the disclosure requirements of paragraphs

[350-30-50-1 through 50-3](https://asc.understandingaccounting.org/asc/350/30/#350-30-50-1)

.

##### [350-30-55-40](https://asc.understandingaccounting.org/asc/350/30/#350-30-55-40)

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In accordance with paragraph [350-30-50-2](https://asc.understandingaccounting.org/asc/350/30/#350-30-50-2), the following disclosures would be made by Theta Entity in its December 31, 20X3 financial statements relating to acquired intangible assets. Theta Entity did not incur costs to renew or extend the term of acquired intangible assets during the period ending December 31, 20X3.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-9D73994B-77E2-4C03-A884-FCEC021D7C45-low.gif)
    
    Note B: Acquired Intangible Assets "As of December 31, 20X3" ($000s) Gross Carrying Amount Accumulated Amortization Amortized intangible assets Trademark " $1,078 " $(66) Unpatented technology 475 (380) Other 90 (30) Total " $1,643 " $(476) Unamortized intangible assets Broadcast licenses " $1,400 " Trademark 600 Total " $2,000 "
    
-   ![](https://asc.understandingaccounting.org/asc-img/GUID-7FAF8F65-CCEB-44F7-9155-72C033D7188C-low.gif)
    
    Aggregate Amortization Expense: For year ended 12/31/X3 $319 Estimated Amortization Expense: For year ended 12/31/X4 $199 For year ended 12/31/X5 $74 For year ended 12/31/X6 $74 For year ended 12/31/X7 $64 For year ended 12/31/X8 $54