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Ksenia Yakunina

Senior lawyer

09 March 2022

Goodwill as an intangible asset

In accordance with Clause 1 of Article 6 of Federal Law No. 402-FZ dated 06.12.2011 On Accounting (hereinafter referred to as the Law on Accounting) "An economic entity is required to conduct accounting records in accordance with this Federal Law, except as otherwise stipulated by this Federal Law.".

In accordance with Paragraph 2 of Article 5 of the Law on Accounting, "Accounting objects of an economic entity are assets.".

In accordance with Clause 7.2. "The accounting concept in the Russian market economy" (approved by the Russian Federation Ministry of Finance, the Presidential Council of the Institute of Professional Accountants of Russia; 29.12.1997.) "Аssets are economic means, over which an entity has control as a result of the fait accompli of its business activities and which are expected to give it economic benefits in the futurе.".

In accordance with Clause 4.11. Conceptual Framework for Financial Reporting (adopted by the IASB) “Many assets, such as basic tangible assets, have a physical form. However, physical form is not a prerequisite for the asset’s existence; therefore, patents and copyrights, for example, are assets if they are expected to bring future economic benefits to the organization and if they are controlled by the organization. ".

In the Ministry of Finance of the Russian Federation Letter dated October 9, 2015 No. 07-01-06/57871, it is noted that “when accepting property for accounting as an asset of a certain type, it is necessary to be guided by the criteria (conditions) established by the relevant regulatory legal acts on accounting.".

In accordance with the Ministry of the Russian Federation Letter dated July 8, 2019 No. 07-01-10/50302 “When accepting assets for accounting as intangible assets - [it is necessary to be guided by] the conditions established by the Accounting Regulations PBU 14/2007 Accounting for Intangible Assets, аpproved by the Ministry of Finance of Russia Order dated December 27, 2007 No. 153n. ".

In accordance with clause 3 of the above-mentioned Russian Ministry of Finance Order dated December 27, 2007, No. 153n “to accept an object as an intangible asset for accounting, it is necessary to fulfill the following conditions at a time:

a) the object is capable of bringing economic benefits to the organization in the future; in particular, the object is intended for use for the products’ production, during work performance or when rendering services, for the organization management needs, or for use in activities aimed at achieving the goals of creating a non-profit organization (including in entrepreneurial activities carried out in accordance with the Russian Federation legislation);

b) the organization has the right to receive economic benefits that this object is capable of providing in the future (the organization has appropriately executed documents confirming the asset existence itself and the existence of this organization rights to the result of intellectual activity or individualization means - patents, certificates, other protection documents, an agreement on the alienation of the exclusive right to the intellectual activity result or individualization means, documents confirming the exclusive right transfer without a contract, etc.), as well as there are access restrictions of other persons to such economic benefits (hereinafter - control over the object);

c) the possibility of distinguishing or separating (identifying) an object from other assets;

d) the object is intended to be used for a long time, i.e., the period of useful use exceeding 12 months or normal operating cycle if it exceeds 12 months;

e) the organization does not intend to sell the object within 12 months or the normal operating cycle if it exceeds 12 months;

f) the оbject actual (initial) cost can be reliably determined;

g) the object has no physical material form.".

Clause 4 of the Russian Ministry of Finance Order dated December 27, 2007, No. 153n states that "Goodwill arising in connection with the acquisition of an enterprise as a property complex (in whole or in part) is also taken into account as an intangible assets part. ".

In accordance with Article 132 of the Russian Federation Civil Code (part one) dated 30.11.1994 No. 51-FZ (hereinafter referred to as the Russian Federation Civil Code) “An enterprise as an object of rights is a property complex used for carrying out entrepreneurial activities. The enterprise as a whole as a property complex is recognized as real estate. An enterprise as a whole or part of it can be an object of sale and purchase, pledge, lease and other transactions related to the establishment, change and property rights termination. The enterprise structure as a property complex includes all property types intended for its activities. It includes land, buildings, structures, equipment, inventory, raw materials, products, rights of claim, debts, as well as the rights to designations that individualize the enterprise, its products, work and services (commercial designation, trademarks, service marks), and other exclusive rights, unless otherwise provided by law or contract. ".

In accordance with Clause 2 of Article 559 of the Russian Federation Civil Code, "Exclusive rights to the means of individualization of the enterprise, products, works or services of the seller (commercial designation, trademark, service mark), as well as the rights to use such means of individualization belonging to him on the basis of license agreements are transferred to the buyer unless otherwise provided by the agreement. ".

According to Article 561 of the Russian Federation Civil Code, “The composition and value of the enterprise to be sold are determined in the enterprise sale contract on the basis of a complete enterprise inventory, carried out in accordance with the established rules for such an enterprise inventory. Before signing the enterprise sale contract, the parties must draw up and review: an inventory act, a balance sheet, an independent auditor opinion on the enterprise composition and value, as well as all debts lists (obligations) included in the enterprise, indicating creditors, nature, size and terms of their requirements. The property, rights and obligations specified in the above mentioned documents are subject to transfer by the seller to the buyer, unless otherwise stated in the Article 559 rules of this Code and is not established by parties’ agreement. ".

In accordance with Clause 3.8. of the Ministry of Finance of the Russian Federation Order dated 13.06.1995 No. 49 On the Methodological Guidelines for the Inventory of Property and Financial Liabilities Approval, "During the intangible assets inventory, it is necessary to check: availability of documents confirming the organization's rights to use it; correctness and timeliness of reflection of intangible assets in the balance sheet."

In accordance with Clause 42 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n "For accounting purposes, the cost of acquired goodwill is determined by calculation as the difference between the purchase price paid to the seller when acquiring an enterprise as a property complex (in whole or in part), and the amount all assets and liabilities on the balance sheet at the date of its purchase (acquisition).". In accordance with Clause 43 of the Ministry of Finance Order No. 153n specified in this Paragraph, “A positive goodwill should be considered as a premium to the price paid by the buyer in anticipation of future economic benefits in connection with the acquired unidentified assets, and accounted for as a separate inventory item.".

It should also be noted that in accordance with Clause 25 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n, "When an intangible asset is accepted for accounting, an organization determines the duration of its useful life.

Useful life is the period, stated in months, during which the organization expects to use the intangible asset to obtain economic benefits (or for use in activities aimed at achieving the goals of creating a non-profit organization).

For certain types of intangible assets, the useful life can be determined based on the product's quantity or other natural indicators of the volume of work expected to be received due to using this type.

Intangible assets for which the useful life cannot be determined reliably are considered intangible assets with an indefinite useful life. ".

In accordance with Clause 42 of the Ministry of Finance of Russia Order dated December 27, 2007, No. 153n, "The acquired goodwill is amortized over twenty years (but not more than the period of the organization's activity). ".

An intangible asset is registered for in accounting using a unified form card No. NMA-1, approved by the Russian Resolution of the State Statistics Committee dated October 30, 1997, No. 71a "On approval of unified forms of primary accounting documentation for accounting for labor and its payment, fixed assets and intangible assets, materials, low-value and wearing out items, works in capital construction. " It should be filled in for each intangible asset. The basics for filling it out are documents confirming the economic entity exclusive rights to intangible assets.


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