ASPE Section 3064
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Goodwill and Intangible Assets
Goodwill and Intangible Assets is part of the Accounting Standards for Private Enterprises (ASPE).
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Conceptual Framework Linkage
Intangible assets and goodwill, with a genuinely distinctive amortization alternative
ASPE Section 3064 governs the RECOGNITION and MEASUREMENT of INTANGIBLE assets and GOODWILL – COVERING BOTH internally GENERATED and SEPARATELY acquired INTANGIBLE assets, and THE subsequent MEASUREMENT of GOODWILL recognized UNDER Section 1582 (see the COMPANION poster). GENUINELY distinctively, ASPE PERMITS an ENTERPRISE to ELECT to AMORTIZE goodwill OVER its ESTIMATED useful LIFE, RATHER than TESTING it EXCLUSIVELY for IMPAIRMENT (Section 7).
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Scope
Identifiable non-monetary assets without physical substance, and goodwill
This Section applies to IDENTIFIABLE non-MONETARY assets WITHOUT physical SUBSTANCE (INTANGIBLE assets), and TO goodwill RECOGNIZED in a BUSINESS combination UNDER Section 1582.
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Recognition Criteria for Intangible Assets
Identifiability, control, and probable future economic benefits
AN intangible ASSET is recognized ONLY where it IS identifiable (SEPARABLE, or ARISING from CONTRACTUAL or OTHER legal RIGHTS), the ENTERPRISE controls IT, FUTURE economic BENEFITS are PROBABLE, and ITS cost CAN be RELIABLY measured.
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Internally Generated Intangible Assets – Research and Development
Research costs expensed; development costs capitalized if criteria are met
RESEARCH costs are EXPENSED as INCURRED. DEVELOPMENT costs are CAPITALIZED only WHERE specific CRITERIA are MET – TECHNICAL feasibility, INTENTION and ABILITY to COMPLETE and USE or SELL the ASSET, and the ABILITY to RELIABLY measure THE attributable EXPENDITURE – CONSISTENT with the GENERAL approach ALSO used internationally UNDER IAS 38.
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Finite-Life Intangible Assets – Amortized
Systematic amortization over the useful life
INTANGIBLE assets WITH a FINITE useful LIFE (e.g. a PATENT with a LEGAL expiration, a CUSTOMER list EXPECTED to GENERATE benefits OVER a SPECIFIC period) are AMORTIZED systematically OVER that USEFUL life, MUCH as an ITEM of PROPERTY, plant, AND equipment WOULD be under SECTION 3061.
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Indefinite-Life Intangible Assets – Tested for Impairment
No amortization, but subject to impairment testing
INTANGIBLE assets WITH an INDEFINITE useful LIFE (RARE under ASPE, GIVEN the FRAMEWORK'S generally AMORTIZATION-oriented default) are NOT amortized, but ARE tested FOR impairment UPON indicators OF impairment ARISING, SIMILAR in SPIRIT to the GOODWILL impairment approach (Section 8).
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THE GOODWILL MEASUREMENT CHOICE – Impairment-Only or Amortization
A genuine, private-enterprise-oriented accounting policy election
AN enterprise MAY elect, as AN accounting POLICY choice, to EITHER (a) test GOODWILL for IMPAIRMENT only UPON indicators OF impairment ARISING (RATHER than MANDATORY annual TESTING), or (b) AMORTIZE goodwill ON a straight-LINE basis OVER its ESTIMATED useful LIFE, NOT exceeding TEN years WHERE a LIFE cannot BE reliably ESTIMATED – TESTING for IMPAIRMENT only UPON indicators OF impairment ARISING under EITHER approach. THIS genuinely DISTINCTIVE alternative WAS introduced IN the Section 1582 POSTER (see the COMPANION poster) and IS repeated HERE as the FULL, ongoing SUBSEQUENT-measurement framework GOVERNING goodwill THROUGHOUT its LIFE.
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The Goodwill Impairment Test, Where Elected
Comparing the reporting unit's fair value to its carrying amount
WHERE the IMPAIRMENT-only approach IS elected, GOODWILL impairment is TESTED by COMPARING the FAIR value OF the REPORTING unit TO which the GOODWILL relates AGAINST that REPORTING unit'S carrying AMOUNT (INCLUDING goodwill) – WITH any EXCESS of CARRYING amount OVER fair VALUE recognized AS an IMPAIRMENT loss, LIMITED to the CARRYING amount OF goodwill ITSELF.
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Worked Example – Amortizing an Acquired Customer List
A finite-life intangible asset, amortized systematically
Example: A customer relationship intangible from an acquisition
A company acquires a customer list valued at $450,000 in a business combination, with an estimated 9-year useful life based on expected customer attrition patterns.
The company AMORTIZES the CUSTOMER list at $450,000 ÷ 9 = $50,000 per year, ON a straight-LINE basis, CONSISTENT with the GENERAL finite-LIFE intangible ASSET amortization approach.
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Worked Example – the Goodwill Impairment Test
Recognizing an impairment loss, limited to goodwill's carrying amount
Example: A reporting unit's fair value has declined
A company elects the impairment-only approach for its $900,000 of goodwill. Due to a significant, sustained decline in operating performance (an impairment indicator), the reporting unit's fair value is determined to be $3,200,000, against a carrying amount (including goodwill) of $3,700,000.
The IMPAIRMENT loss = $3,700,000 − $3,200,000 = $500,000, LIMITED to the $900,000 CARRYING amount OF goodwill – the COMPANY recognizes a $500,000 goodwill IMPAIRMENT loss, REDUCING goodwill to $400,000.
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Disclosure Requirements
What Section 3064 requires
Useful lives and amortization methods for finite-life intangible assetsGoodwill's subsequent measurement policy (impairment-only or amortization) and, if amortized, its useful lifeAmount of any goodwill or intangible asset impairment loss recognized during the period
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Critical Judgments & Estimates
Where judgment matters most
SIGNIFICANT JUDGMENTS
Whether to elect goodwill amortization or the impairment-only approachWhether development costs meet the specific capitalization criteria
SIGNIFICANT ESTIMATES
Useful lives of finite-life intangibles and, if elected, of goodwillFair value of a reporting unit, for goodwill impairment testing
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Relationship to IAS 38 / IFRS 3
Comparison – ASPE Section 3064 vs IAS 38 / IFRS 3
FeatureASPE Section 3064IAS 38 / IFRS 3
Development cost capitalization criteriaSame core criteriaSame core criteria – converged
Goodwill subsequent measurementImpairment-only OR amortization alternativeImpairment-only ONLY
THE goodwill AMORTIZATION alternative REMAINS the SINGLE most SIGNIFICANT divergence FROM unmodified IFRS – INTANGIBLE asset RECOGNITION and AMORTIZATION mechanics OTHERWISE remain THOROUGHLY converged.
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Statement Mapping
Where every goodwill/intangible event lands
EventStatement(s) affectedNotes
Goodwill amortization (if elected)BS ISSystematic straight-line expense
Goodwill impairment (if elected)BS ISRecognized upon indicators, limited to goodwill's carrying amount
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Related Standards
Cross-reference map
SectionConnection
Section 1582Business Combinations – supplies the initial goodwill recognition this Section's subsequent measurement applies to
Section 3063Impairment of Long-lived Assets – governs impairment testing for tangible and finite-life intangible assets, distinct from goodwill's own approach here
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Quick-Reference Glossary
Goodwill amortization alternative
An accounting policy election permitting a private enterprise to amortize goodwill straight-line over its estimated useful life (up to 10 years), rather than testing exclusively for impairment.
Reporting unit
The level at which goodwill is tested for impairment under the impairment-only approach.
Financial statement key (ASPE terminology)
BS Balance Sheet
IS Income Statement
SRE Statement of Retained Earnings / Statement of Changes in Equity
SCF Cash Flow Statement