INTANGIBLE ASSETS Essay Example

INTANGIBLE ASSETS

UNIT CODE

DATE OF ADMISSION

Intangible assets: — these are assets which have monetary values but with no physical substance, that is they cannot be seen physically. They include assets like copy right and goodwill. They must be disclosed in the balance sheet when reporting (Chalmers et al., 2012).

Recognition of intangible:- In order for an asset to be recognized in as intangible assets in the balance sheet, it is important for it to meet definition of intangible asset. While recognizing the intangible assets, it is important to include cost incurred when acquiring the asset or cost incurred while internally generating the asset internally and in circumstances when the rule is not followed it must be disclosed as the expenditure. The criteria used in recognizing intangible is based on whether it is probable expected economic benefits will flow to the business or not and the cost can be reliably measured (Cheung, Evans &Wright 2008).

Measurement of intangible assets: — Carvalho, Rodrigues & Ferreira (2016) states that intangible assets are measures in two stages, in the first measurement there are three types of acquisition with distinct measurement basis of recognition. It includes separately acquired assets being measured on the cost of purchase and import duties and the nonrefundable tax on purchases less purchase discount. While the second part is measured on the fair market value.

In evaluating the relevance of the case in the study, we realized that no intangible assets can arise from research and development will be recognized but will be an expense, on research phase of internal project shall be recognized as an expense when it is incurred. As for our case we don’t recognize intangible asset.

Bibliography

Carvalho, C., Rodrigues, A.M. and Ferreira, C., 2016. The Recognition of Goodwill and Other Intangible Assets in Business Combinations–The Portuguese Case. Australian Accounting Review, 26(1), pp.4-20.

Chalmers, K., Clinch, G. and Godfrey, J.M., 2012. Adoption of international financial reporting standards: impact on the value relevance of intangible assets. Australian Accounting Review, 18(3), pp.237-247.

Cheung, E., Evans, E. and Wright, S., 2008. The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets. Australian Accounting Review, 18(3), pp.248-256.