ASC 350-30-35-6 states that, “[the] method of amortization shall reflect the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. If that pattern cannot be reliably determined, a straight-line amortization method shall be used.” When an income approach method is used to value an intangible asset, it is appropriate to amortize that asset in a manner that reflects the cash flows utilized in the valuation. That being said, many companies still use a straight-line approach. The following exhibit can be used to determine the possible ways to amortize an intangible asset that was valued using an income approach method.

 


Disclaimer: DS+B, and the author, give no warranties or representations concerning this free template, and accept no liability in relation to its use.