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Example 7.26: Intangible Assets, Net Intangible assets are recorded at cost less accumulated amortization. Amortization is calculated on a straight‐line basis over the following estimated useful lives:

Logistics platform—three years

The Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired. There was no such impairment as of June 30, 20X8.

Example 7.27: Goodwill Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. At August 31, 20X8, the Company recorded goodwill of $150,618 and $92,989, respectively, related to its acquisition of Blake Health, Inc. during the fiscal year ended August 31, 20X7 and Global Fitness Leaders during the fiscal year ended August 31, 20X8. As of August 31, 20X8 and 20X7, the Company performed the required impairment reviews. Based on its reviews at August 31, 20X8 and 20X7, the Company believes there was no impairment of its goodwill.

Example 7.28: Goodwill and Intangible Assets Goodwill and other identifiable intangible assets with indefinite lives that are not being amortized, such as trade names, are tested at least annually for impairment and are written down if impaired. Identifiable intangible assets with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever facts and circumstances indicate that their carrying values may not be fully recoverable. The intangible assets with definite lives are being amortized over its estimated useful lives of 5 years using the straight‐line method.

The Company operated an online gaming site featuring sophisticated playing zones, game broadcasts with software analyses and top analysts' commentaries, education and other chess oriented resources. Intangible assets represented the amount incurred by the Company related to the development of the online chess gaming website.

Under ASC 985‐20, there are two main stages of software development. These stages are defined as:

1 (A) When the technological feasibility is established, and

2 (B) When the product is available for general release to customers.

Costs incurred by the Company up to stage A have been expensed while costs incurred to move from stage A to stage B have been capitalized.

The Company evaluates the recoverability of the infinite‐lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such review indicates that the carrying amount of intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

During the year ended December 31, 20X7, the intangible asset was written off based on management's review and evaluation of its recoverability. With respect to goodwill, during the year ended December 31, 20X8, the Company has identified no circumstances which would call for further evaluation of goodwill impairment.

Example 7.29: Software Development Costs The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the application is substantially complete and ready for its intended use. These costs are amortized using the straight‐line method over the estimated economic useful life of 5 years starting from when the application is substantially complete and ready for its intended use.