Should Investments Into Innovation ( R & D )

In the short module of accounting that I did in first year, we were taught to establish whether or not something can be recognized as an asset. We had to make sure that each element of the definition of an asset were met, we had to do a little ‘definition and recognition.’ I am going to prove

In the world of business, it is crucial to keep track of revenues and expenses in order to evaluate the economic condition of one’s business. Other than revenues and expenses, accountants must also document the changes within a business’s assets and liabilities. Changes in assets and liabilities affect the owner’s equity. The revenue and expense accounts are recorded in the income statement, while assets, liabilities, and owner 's equity are recorded in the balance sheet. The balance sheet and income statements make up the general ledger.

6-8). For an asset to have alternative use, it must be reasonably expected (greater than a 50% chance) that an entity will achieve economic benefit from such alternative use and further development is not needed at the acquisition date to use the asset (E&Y, pg. 6-9).While under IFRS, acquired research and development assets are capitalized if it is probable that they will have future economic benefits. The price paid reflects expectations about the probability that the future economic benefits of the asset will flow to the entity. The probability recognition criterion is always assumed to be met for separately acquired intangible assets (E&Y, pg. 6-9). The starting point for companies applying IFRS is to differentiate between costs that are related to ‘research’ activities versus those related to ‘development’ activities. According to KPMG, while the definition of what constitutes ‘research’ versus ‘development’ is very similar between IFRS and US GAAP, neither provides a bright line on separating the two. Instead, a company needs to develop processes and controls that allow it to make that distinction based on the nature of different activities.

Assets are to be recorded and valued based of the type of asset there are.

Items of value to a company such as equipment or supplies needed for running an efficient business are called an asset. A liability is when a company owes for a service or pay for employees. After a liability is subtracted from an asset this becomes the owners interest in the company or owners’ equity. Regardless of the standards followed by accountants, they will always classify accounts into these three categories resulting in the Accounting Equation: (Editorial Board, 2012, p. 9- 10)

6. The ability to reliably measure the costs associated with and attributed to the intangible asset during its development

Assets are things that a company owns that have value. This usually means they can either be sold or used by the company to make products or provide services that can be sold. Assets include physical property, such as plants, trucks, equipment and inventory. Assets also include things that can't be touched but nonetheless exist and have value, such as trademarks and patents. Cash itself is an asset, as well as

E12-1 (Classification Issues—Intangibles) Presented below is a list of items that could be included in the intangible assets section of the balance sheet.

Furthermore, the Key Audit Matter (KAM) of goodwill and intangible assets disclosed in Telstra Corporation Ltd annual report are recognised as core assets. In note 2.4.2, it can be seen that intangible assets has the highest deferred tax liabilities after non-current assets. This is to be expected since it is a telecommunication and technology company so the cost incurred is significant for intangible assets such as research and development, capital costs and obtained intangible assets. Therefore, this is considered highly material as the events or transactions would impact Telstra as a whole such as the industry competitiveness and not just the financial statement alone. Moreover, it is complex to evaluate the impairment of the goodwill and

Intangible Assets were part of the 2006 “memorandum of understanding” between FASB and IASB. Eventually, intangibles assets were cut from the list of changes to be made. In future years the problems will have to be addressed. As far as research and development costs, IAS 38 will likely be fully adopted. One major problem still being faced is the revaluation of intangible assets. Under GAAP, revaluation is strictly prohibited. Under IFRs, revaluation

Argent Leisure (comprising Dreamworld) has 3 main types of Intangible assets apart from a group of other intangible assets, a part of which get amortised every year. These intangible assets are customer relationships, brands and goodwill.

AASB 138 Intangible Assets is equivalent to IAS 38 as issued by the International Accounting Standard Board. This standard prescribes the accounting for intangible assets which are not dealt with specifically in another standard. In simple words, intangible assets are those non-monetary assets which do not have any physical substance. This includes Goodwill, patents, copyrights, research and development, etc. These kinds of assets do not have any physical substance, but these assets add value in the business. For example: According to Forbes, the brand value of Coca-Cola is $54.9 billion, as the brand is such asset which don’t have physical substance, it can be identify as Intangible

The intangible asset needs to be identifiable which means that the organization should be able to dispose of the asset without disposing off the whole of the business at the same time.

AASB 138 defines intangible assets as “identifiable non-monetary assets without physical substance”. Such assets include but are not limited to goodwill, trademarks, patents and research and development. AASB 138 Intangible Assets has been implemented to prescribe the accounting treatment for intangible assets that have not been specifically dealt with in any other standard. Therefore, this standard only applies to intangible assets that have not been previously dealt with. Furthermore, it can be established that this standard is an example of normative accounting theories because the standard prescribes what should be done, rather than predicts what people may do. According to AASB 138 Intangible Assets, in order for an asset to be recognised in the financial statements it must meet specific criteria. The required criterion states that the asset must be identifiable, the entity has control of the asset, future economic benefits are probable and the cost of the asset can be measured reliably.

One of these is with regards to goodwill and intangible assets with identifiable useful lives.