Definition of Trademark
In the U.S. a trademark could be a word, phrase, logo, etc. registered with the U.S. Patent and Trademark Office. If a company purchases a trademark from another company, the amount paid for the trademark is recorded in a general ledger intangible asset account. If a company designs and registers its trademark, the amount recorded is limited to its cost. Costs incurred to defend a trademark are also recorded in the trademark account.
The cost of a trademark may have been very small, but over time has become very valuable. (Think Apple, Coke, Nike, etc.) Due to the cost principle , the balance sheet may be reporting trademarks at close to $0.
Examples of Trademarks on the Balance Sheet
Assume that Company X, a consumer products company, introduced a new product in 2002. It registered the trademark in 2002 for a small fee that was immediately expensed . Since then Company X has been very effective in promoting this trademarked brand. Consumers now pay a premium price for this recognized and superior product. A competitor offers to purchase the trademark from Company X for $100 million in cash. If Company X does not sell the trademark, Company X will not list the trademark as an asset. (Recall that the trademark's cost was $0.)
If Company X were to sell the trademark to Company Y for $100 million, Company Y will report the trademark on its next balance sheet at $100 million. The reason is the 游戏电竞线上外围APP v5.2re was a transaction for $100 million and Company Y's cost of the trademark was $100 million.
