Financial accounting statement 142Intangible assets are an increasingly important economic resource for many businesses. Intangible assets also represent a larger portion of assets acquired in an acquisition or business combination. Therefore, more useful information about intangible assets is needed both for those involved in the transaction and for potential investors in the public community. Statement 142 replaces Accounting Principles Board (APB) Notice No. 17, Intangible Assets, to produce better information the public can rely on. APB Opinion No. 17 was published in August 1970 and concerns intangible assets acquired from companies or individuals. The notice states that the cost of acquiring intangible assets should be classified as intangible assets. For intangible assets that are not readily identifiable, the Notice clarifies that the cost of developing these assets should be charged to revenue as they arise. However, internally developed intangible assets will not be added to the balance sheet assets according to Notice 17. Finally, the amortization policy of the Notice is as follows: intangible assets must be amortized over the life of the benefits ; however, the amortization should not exceed forty years. Therefore, the theory behind this amortization rule is that the value of intangible assets will disappear over the amortization period. “Statement 142 addresses the financial accounting and reporting of acquired goodwill and other intangible assets and replaces PDB Notice No. 17, Intangible Assets. » The Statement was issued in June 2001 to improve and modify Notice 17 policies for intangible assets and to clarify how to treat goodwill. The statement explains how assets acquired in acquisition, either individually or with a group of assets, should be accounted for in the financial statements. When acquired, intangible assets must be recognized at fair value on the balance sheet. (Fair value is the amount for which the asset can be sold in a current transaction between willing parties, such as a quoted market price.) However, internally developed intangible assets should not be recognized at balance sheet and should be recognized as an expense when incurred (as noted in Notice 17). The statement states that intangible assets with a limited life should be amortized over their useful life. The useful life of an intangible asset is the period over which that asset is expected to contribute to the entity's future cash flows. In order to determine the useful life, many factors must be considered: the length of time the entity plans to use the asset, the lifespan of a comparable asset in the business, and legal factors and economical, to name just a few..