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You will prepare and submit a term paper on Accounting for Intangible Assets. Your paper should be a minimum of 2000 words in length.
You will prepare and submit a term paper on Accounting for Intangible Assets. Your paper should be a minimum of 2000 words in length. The paper shows the intangibles that can not be owned legally and are generated as a result of productivity, efficiency, and effectiveness, etc. These are those assets due to which an entity gains a competitive advantage over other entities and for which it is known to exist.
In light of the IAS 38, the intangible asset should be amortized over the period through which the benefits will be accrued. The intangible asset shall also be tested for any impairment due to which the cost of the asset will be reduced.
There are numerous issues that have been raised relating to the accounting of the intangibles since the change in the way that business is conducted throughout the world, some of which are discussed in detail:
It has been argued that the most vigorous value driver in a company is its human capital but the measurement of the human capital and its recognition has always raised questions. There have been arguments regarding its valuation and its impairment.
The researches carried out by the auditing firms have proven that the intangible assets can be reliably measured but the question remains that which standards method should be relied upon for its measurement?
The assets that do not possess an active market require being valued at the price that they will be bought or exchanged. Some companies have also used different methods such as the benefit that will be derived from the use of it during the life or the tenure of use of the asset.
The International Accounting Standard requires that the company should charge all the cost pertaining to the phase where the research was being carried to the expense and the phase where the development was being should be capitalized.
The issue is that of the recognition of the phase where the research has ended and the development has started. For many industries, it is very difficult to distinguish between the phase when the .asset has entered its development phase and it shall capitalize on it.
