603.4 Accounting for Intangible Assets – Miscellaneous

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Last updated: Jun 02, 2021

YEAR-END ACCOUNTING PROCEDURES: Year-end accounting procedures pertaining to intangible assets are in the fixed assets section of the Annual Closing of the Books Instructions.

PSU will prepare a reconciliation at the end of each fiscal year to show that the change in the Banner FIS general ledger account balance for each type of intangible asset to the capitalized cost of intangible assets acquired during the year less the intangible assets disposed of during the year.

UPGRADES AND ENHANCEMENTS: Upgrades and enhancements are defined as modifications to an existing intangible asset that result in additional functionality, an increase in efficiency, or an extension of the estimated useful life. Significant modifications may result in a new and separate intangible asset record. All other modifications are expensed in the year incurred.

IMPAIRMENT: Loss due to impairment should be measured as the difference between the book value (original cost less accumulated amortization) and the net realizable value (the estimated amount that can be recovered from selling, or any other method of disposing of an item, less the estimated cost of disposal), if any.

For software, impairment should be recognized and measured when one of the following occurs:

  • The software is no longer expected to provide substantial service potential and will be removed from service.
  • A significant adverse change occurs in the extent or manner in which the software is used or is expected to be used.
  • A significant change is made or will be made to the software program.
  • Stoppage of development of computer software due to a change in the priorities in management.
  • For other intangible assets, impairment should be recognized and measured when one of the following occurs:
  • The intangible asset is no longer expected to provide substantial service potential and will be removed from service.
  • Stoppage of development of an internally generated intangible asset due to a change in the priorities in management. Intangible assets impaired from development stoppage should be recorded at the lower of carrying value or fair value.