How are purchased intangible assets recorded under U.S. GAAP?

Purchased intangible assets are recorded at cost under U.S. GAAP, which includes the purchase price and any costs that are directly attributable to preparing the asset for its intended use, such as legal fees. This approach ensures that the financial statements reflect all expenditures necessary to acquire and ready the asset for use.

The initial cost is critical because it sets the basis for subsequent amortization and impairment testing. Therefore, any legal fees incurred directly related to the acquisition process are indeed included in the cost of the asset. This method provides a clear representation of the investment made to acquire the asset and is consistent with the basic principle of matching costs with benefits, enabling users of financial statements to assess the value and impact of acquisitions properly.