In a classified balance sheet prepared under U.S. GAAP, how should intangible assets generally be presented and disclosed?

• A. Reported as current assets at fair value with changes in fair value recognized in net income each period.
• B. Reported as part of Property, Plant, and Equipment and depreciated over their useful lives, with no separate note disclosure required.
• C. Expensed immediately unless they are internally generated, in which case they are capitalized and not amortized.
• D. Reported as a separate noncurrent asset category (e.g., “Intangible assets”) at cost less accumulated amortization, with major classes disclosed in the notes.

Answer: (D)

Verified step by step guidance

1. Understand that intangible assets are non-physical assets that provide future economic benefits, such as patents, trademarks, and copyrights.
2. Recognize that under U.S. GAAP, intangible assets are classified as noncurrent assets because their benefits extend beyond one year.
3. Know that intangible assets are recorded at their historical cost and are subsequently amortized over their estimated useful lives, except for those with indefinite lives which are tested for impairment instead of amortized.
4. In the classified balance sheet, intangible assets should be presented as a separate line item under noncurrent assets, distinct from Property, Plant, and Equipment.
5. Additionally, major classes of intangible assets and their amortization policies must be disclosed in the notes to the financial statements to provide transparency to users.