Acct 3563 Notes
Week 3: Accounting for Intangible Assets
Introduction
Change from a manufacturing to a “knowledge based” industry Increase market to book gap
Intangible Assets play a major role
Assets: Definition * Resource controlled by an entity as a result of past events from which future economic benefits are expected to flow to the entity
Assets Recognition Criteria * Recognition Criteria * Under AASB Framework (par 89) an asset is to be recognised in the balance sheet only when * It is probable that future economic benefits embodied in the asset will flow to the entity and * The asset posses a cost or other value that can be measured reliably
Intangible Assets * AASB 138 defines intangible assets are identifiable non-monetary assets without physical substance. * Common examples are * Customer list * Patents and copyrights – identifiable can be separate from other assets * Broadcasting licenses and mastheads * Trademarks and brand names * Research and development
Need to be able to separate from other assets in monetary – then full under financial instruments * Identifiable intangible assets – patents, trademarks, brand names and copyrights * Can be considered identifiable as a specific value can be placed on each asset, and they can be separate identified and sold * Unidentifiable intangible assets – intangible assets that cannot be separately sold, such as loyal customers and established reputation. Cannot be individually measured with acceptable levels of reliability.
Identifiably * The asset must be: * Capable of being separated and sold, transferred, licensed, rented or exchanged * Arising from contractual or other legal rights * Copyrights (identifiable) * Staff skills, reputation, teamwork, customer relations (unidentifiable)
Control
* An entity controls an asset * If the entity has the power to obtain the future economic benefits * And to restrict the access
Introduction
Change from a manufacturing to a “knowledge based” industry Increase market to book gap
Intangible Assets play a major role
Assets: Definition * Resource controlled by an entity as a result of past events from which future economic benefits are expected to flow to the entity
Assets Recognition Criteria * Recognition Criteria * Under AASB Framework (par 89) an asset is to be recognised in the balance sheet only when * It is probable that future economic benefits embodied in the asset will flow to the entity and * The asset posses a cost or other value that can be measured reliably
Intangible Assets * AASB 138 defines intangible assets are identifiable non-monetary assets without physical substance. * Common examples are * Customer list * Patents and copyrights – identifiable can be separate from other assets * Broadcasting licenses and mastheads * Trademarks and brand names * Research and development
Need to be able to separate from other assets in monetary – then full under financial instruments * Identifiable intangible assets – patents, trademarks, brand names and copyrights * Can be considered identifiable as a specific value can be placed on each asset, and they can be separate identified and sold * Unidentifiable intangible assets – intangible assets that cannot be separately sold, such as loyal customers and established reputation. Cannot be individually measured with acceptable levels of reliability.
Identifiably * The asset must be: * Capable of being separated and sold, transferred, licensed, rented or exchanged * Arising from contractual or other legal rights * Copyrights (identifiable) * Staff skills, reputation, teamwork, customer relations (unidentifiable)
Control
* An entity controls an asset * If the entity has the power to obtain the future economic benefits * And to restrict the access