Explain the preferred use of historical cost as the basis for recording property and equipment and intangible assets.

 . Realize that the use of historical cost means that a company’s intangible assets such as patents and trademarks can be worth much more than is shown on the balance sheet. 

. Recognize that large reported intangible asset balances can result from their acquisition either individually or through the purchase of an entire company that holds valuable intangible assets.

  Show the method of recording intangible assets when the owner is acquired by a parent company