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4.6 Typical intangible assets' useful lives by major industry
Publication date: 15 Jun 2023
us Business combinations guide
Figure BCG 4-4 highlights typical intangible assets found in major industries and their typical life characteristics. This table serves as a broad overview only and is not intended to reflect all of the intangible assets that may be present for an industry participant or in a particular situation. In determining the useful lives of its recognized intangible assets, an entity must perform a thorough evaluation of the relevant facts and circumstances.
Figure BCG 4-4
Typical intangible assets found in major industries and some of their typical life characteristics
Typical intangible assets found in major industries and some of their typical life characteristics
Industry | Typical significant intangible assets | Typical life characteristics |
Retail & consumer products
|
| Trade names, brand names, and franchise rights are likely to be long or possibly indefinite-lived if sustainable; otherwise, are short to moderate. Supplier arrangements are based on contractual terms, assuming renewals when appropriate (excluding a reacquired right). Contractual relationships are driven by contractual life or longer for low-cost renewals. Technology and know-how range from short- to long-term.
|
Industrial products
|
| Trade names are likely to be long or possibly indefinite-lived if sustainable; otherwise, are short to moderate. Contractual relationships are driven by contractual life or longer for low-cost renewals. Technology and know-how range from short- to long-term. Customer relationships are often short to moderate but may be longer depending on rate of customer churn.
|
Real estate
|
| Determined by lease life and expectation of tenant renewals.
|
Banking
|
| CDI is short to moderate, based on customer churn, although may be longer for companies based outside the United States.
Brands and trade names are long and possibly indefinite-lived if sustainable. Others are typically short to moderate. Contractual relationships are driven by contractual life.
|
Insurance
|
| Customer relationships and distribution channels are moderate. Trade names are long and possibly indefinite-lived if sustainable; otherwise, are short to moderate. Certain insurance licenses can be maintained indefinitely without substantial cost.
|
Investment management
|
| Trade names are long and possibly indefinite-lived if sustainable; otherwise, are short to moderate. Customer relationships are moderate, but may be longer where focus is on institutional clients rather than retail. Fund manager contracts and the customer relationships of the funds are interdependent and require special analysis. The lives of fund manager contracts are driven by the expectation of renewal with the funds and are likely to be moderate- to long-term, or possibly indefinite-lived.
|
Technology
|
| Trade names are likely to be long or possibly indefinite-lived if sustainable; otherwise, are short to moderate. Contractual relationships are driven by contractual life or longer for low-cost renewals. Technology and know-how range from short- to long-term. Customer relationships are often short to moderate but may be longer depending on rate of customer churn and the degree to which customer retention is dependent on the future technology development.
IPR&D would be an indefinite-lived intangible asset until the asset is abandoned or put to use or in operation as a product, at which time the life may be short to moderate, depending on the product and degree of patent protection.
|
Life sciences and pharmaceuticals
|
| Brands and trade names are likely short to moderate, depending on product portfolio (i.e., remaining legal life of identifiable intangible assets). The exception is where brands and trade names have value and are sustainable, which could be long and possibly indefinite-lived.
IPR&D would be an indefinite-lived intangible asset until the asset is abandoned or put to use or in operation as a product, at which time the life may be short to moderate, depending on the product and degree of patent protection.
|
Entertainment and media
|
| Trade names/trademarks and certain licenses and artistic properties likely to be longer term or possibly indefinite-lived if sustainable.
|
Telecommunications
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| Trade names likely to be long or possibly indefinite-lived if sustainable; otherwise, short to moderate. Other intangible assets range from short (technology) to long or indefinite (licenses), depending on ability to renew and risk of obsolescence. Customer relationships are often short to moderate but may be longer depending on rate of customer churn.
|
Energy & resources (including oil & gas)
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| Trade or brand names likely to be longer term or possibly indefinite-lived, if sustainable; otherwise, short to moderate. Contractual relationships are driven by contractual life or longer for low-cost renewals. Customer relationships are often short to moderate but may be longer depending on rate of customer churn.
|
1 If there is a monopoly in place, an intangible asset would generally not exist as it would be unlikely that the customer relationship would be separable from the business.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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