![]() This result suggests that limiting managements' choices to record intangible assets tends to reduce, rather than improve, the quality of the balance sheet and investors' information set. The results also indicate that the intangible assets management has a voluntary (unregulated) choice to record-identifiable intangible assets-are more highly correlated with underlying economic factors than the regulated classes, purchased goodwill and R&D assets. These effects are more important than other contracting and signaling factors consistent with the underlying economics operating as a first-order effect as envisaged by GAAP. Goodwill Intangible Assets - Goodwill Goodwill is not amortized. Only purchased goodwill is an intangible asset. ![]() The amount by which the consideration exchanged exceeds the fair value of net identifiable assets acquired. The results suggest that management's choice to record intangible assets is associated with the strength of the technology affecting the firms operations, the length of the technology cycle time, and property-rights-related factors that affect the firm's ability to appropriate the investment benefits. Franchise Self-study Intangible Assets Slide 10 10-10 Occurs when one company buys another company. It exploits a setting in which management has accounting discretion to record a wide range of intangible assets. This paper examines the extent to which management makes accounting choices to record intangible assets based on their insights into the underlying economics of their firm.
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