This guide provides guidance and illustrations regarding the initial and subsequent accounting for, valuation of, and disclosures related to acquired intangible assets used in research and development activities (IPR&D assets).
This is a valuable resource for preparers of financial statements, auditors, accountants and valuation specialists seeking an advanced understanding of the accounting, valuation, and disclosures related to acquired IPR&D assets.
Key topics covered:
- Initial and subsequent accounting for IPR&D assets acquired in a business combination and an asset acquisition.
- Key accounting considerations such as "used in R&D activities" criteria, unit of account, defensive IPR&D assets, useful life of completed intangible assets used in R&D activities, and elimination of core technology concept.
- Detailed information on subsequent Day 2 accounting for acquired IPR&D assets, including such issues as determining useful life, amortization, and impairment testing.
- Step-by-step guidance on how to measure fair value of IPR&D assets acquired in a business combination, asset acquisition, or for impairment testing and measurement purposes, including detailed discussions and examples of how to apply multiperiod excess earnings method, relief from royalty method and decision tree analysis.
- Comprehensive example which illustrates using the relief from royalty method to value trade name and patents, the “with and without” method to value customer relationships, and the multiperiod excess earnings method to value developed technology and IPR&D.
- Detailed discussion of steps to derive, prepare, and analyse the prospective financial information for IPR&D assets.