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Chapter Summary

Section 11.1: Tangible vs. Intangible Assets​

  • Tangible: Physical assets (equipment, buildings)
  • Intangible: Non-physical assets (patents, goodwill)
  • Different accounting treatment
  • PCN Class 2 for both

Section 11.2: Capitalized Costs vs. Expenses​

  • Capitalize: Long-term benefits, significant costs
  • Expense: Immediate benefit, immaterial costs
  • Include all direct costs in asset cost
  • Exclude VAT (if recoverable)

Section 11.3: Depreciation Methods​

  • Straight-line: Constant amount each year
  • Declining balance: Accelerated method
  • Units-of-production: Based on usage
  • Must use consistent method

Section 11.4: Intangible Assets​

  • Finite life: Amortize
  • Indefinite life: Test for impairment
  • Goodwill: Not amortized
  • Patents: Amortized

Section 11.5: Special Issues​

  • Impairment: Write down if value declines
  • Disposal: Remove asset, record gain/loss
  • Repairs vs. Improvements: Expense vs. capitalize

Section 11.6: Luxembourg PCN Class 2​

  • 200000-219999: Intangible Assets
  • 220000-229999: Tangible Assets
  • 240000-249999: Accumulated Depreciation
  • Must use proper classifications

Section 11.7: Luxembourg Depreciation Rules​

  • Tax rates differ by asset type
  • Can differ from book depreciation
  • Must follow tax rules for tax
  • Affects taxable income

Section 11.8: Luxembourg Intangible Assets​

  • Goodwill: Not amortized
  • Patents: Amortized
  • Trademarks: May be indefinite
  • Must comply with standards