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You will prepare and submit a term paper on Accounting Problems of Intangibles. Your paper should be a minimum of 1750 words in length.
You will prepare and submit a term paper on Accounting Problems of Intangibles. Your paper should be a minimum of 1750 words in length. As per John Barry (page 17)1 intangible assets are defined as “assets that cannot be touched, have no independent market value (as opposed to physical hard assets, like a building or a tractor, which do have value), and are not treated as assets at all in financial statements (except for IT). Most assets that are deemed intangibles find their way onto the company’s income statement, where they are expensed, as opposed to being placed on the balance sheet, where they would be capitalized.” The later part of the definition provided by John Barry has described the subject matter of this essay. That is despite the growing role of intangibles, these unseen assets do not find the recognition they deserve in with modern formulators of regulations, standards, and procedures of financial accounting.
The accounting approach towards the recognition of intangibles is lopsided. For example in cases of mergers and takeovers whatever intangibles remain unidentified are treated as goodwill, as if goodwill is a dumping ground of listless or unidentifiable intangibles.
The physical appearance of assets is of prime importance so far as the presentation in the balance sheet is concerned. A balance sheet lists the assets both as current and non- current assets and the term intangible remaining obscured as something not very relevant.
Intangibles are defined or stated under conventional headings like Goodwill, copyrights, etc., but those developing with changing times like human capital etc are not even considered or clubbed, as most of the physical assets find their way under the broad classification of ‘properties, plant, and equipment.’
Rules and regulations have so not established or standardized to measure and evaluate intangibles. Mere stating that intangible assets be tested for impairment does not serve the purpose unless there is a proper methodology to evaluate fair values at reporting dates. .
