Aasb 138 Intangible Assets

Topics: Balance sheet, International Financial Reporting Standards, International Accounting Standards Board Pages: 11 (3627 words) Published: October 8, 2012
Regulation is a topic that has been debated for many years and will continue to be debated for years to come. In the business and finance sector, there are many regulators including but not limited to the Australian Securities and Investment Commission (ASIC), Financial Reporting Council (FRC), Australian Prudential Regulation Authority (APRA) and the Australian Accounting Standards Board (AASB). While these are only a few regulatory bodies in the industry, they all have their own set of regulations to enforce. ASIC, for example, regulate the Corporations Act 2001 along with the Australian Accounting Standards. While ASIC ensure that organisations adhere to the regulations laid out before them, the AASB create and develop those standards applicable to Australian entities, reporting to the FRC. When developing standards, there are many issues the AASB need to consider. These include but are not limited to future accounting transactions, the effect on the preparation of financial reports, the future economic detriment of the organisations affected and the expectations of the public. One such standard that has been introduced since the inception of the International Accounting Standards in 01 January 2005 is AASB 138 Intangible Assets which is the Australian standard relating to the International Accounting Standard, IAS 38 Intangible Assets. AASB 138 Intangible Assets is a standard that has been debated since its adoption in 2005, due to the negative effect it has had on the profitability of organisations that are affected by the standard. This paper will explore AASB 138 Intangible Assets in an attempt to establish the issues that arose prior to the standard being implemented and the current stance taken by the AASB. Furthermore, the positive and negative implications that have arisen as a result of the standard being introduced will be investigated, along with any changes in transaction requirements since the adoption of AASB 138 Intangible Assets. As mentioned earlier, the AASB is responsible for developing, issuing and maintaining Australian Accounting Standards and related pronouncements. The conceptual framework is a guideline used by the AASB to implement these standards and pronouncements, including what is regulated and how it is regulated. There are many different theories associated with regulation that need to be considered when creating these standards, however, this paper will discuss only three of these theories. Public Interest Theory states that the regulators will protect the rights of the public at large; whereas Capture Theory proclaims that the people being regulated have captured the regulatory body by sitting on the board and influencing decisions about the regulation of their sector. Lastly, Economic Interest Theory claims that regulatory bodies choose the outcome that will satisfy the greater good analogy where the solution that satisfies the largest group of people will be introduced. A regulation that will see an increase in fees being awarded to the government (such as super profit taxes) rather than wealthy mining executives reaping huge profits is an example of Economic Interest Theory because the government can use those funds on a grander scale rather than one person buying themselves a luxury yacht. While this theory seems to be prominent in accounting regulation, all three are present in other regulated sectors. Real Estate, for example, has real estate agents sitting on the Real Estate Institute of Queensland board and can influence decisions regarding regulation, implying that Capture Theory exists in this sector. The standard setting process that the AASB adheres to is both simple and complex. While there are issues that need to be addressed and solutions that need to be created, the standard is not simply put into place after a resolution is created. The first process in standard setting is to identify the issue that needs to be resolved. The issue is then added to...
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