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Accounting for Intangible Assets: Thinking It Through

Accounting for Intangible Assets: Thinking It Through With the modern corporation investing more in intangible assets, the issue of appropriate accounting for these assets is very much at the fore and formally on the agendas of accounting standards boards. Some commentators advocate that internally generated intangible assets should be booked to the balance sheet, just like tangible assets. This paper explains that this apparently straightforward solution is not so simple. There are subtleties that, when recognised, indicate that such accounting would often make both balance sheets and income statements less informative. In response, the paper outlines an accounting for intangible assets that preserves, indeed enhances, the information conveyed by both the balance sheet and the income statement and satisfies the financial reporting objective of providing information to investors about ‘the amount, timing, and uncertainty of future cash flows’. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Australian Accounting Review Wiley

Accounting for Intangible Assets: Thinking It Through

Penman, Stephen
Australian Accounting Review , Volume 33 (1) – Mar 1, 2023
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References (18)

Publisher
Wiley
Copyright
© 2023 CPA Australia Ltd (CPA Australia).
ISSN
1035-6908
eISSN
1835-2561
DOI
10.1111/auar.12394
Publisher site
See Article on Publisher Site

Abstract

With the modern corporation investing more in intangible assets, the issue of appropriate accounting for these assets is very much at the fore and formally on the agendas of accounting standards boards. Some commentators advocate that internally generated intangible assets should be booked to the balance sheet, just like tangible assets. This paper explains that this apparently straightforward solution is not so simple. There are subtleties that, when recognised, indicate that such accounting would often make both balance sheets and income statements less informative. In response, the paper outlines an accounting for intangible assets that preserves, indeed enhances, the information conveyed by both the balance sheet and the income statement and satisfies the financial reporting objective of providing information to investors about ‘the amount, timing, and uncertainty of future cash flows’.

Journal

Australian Accounting Review – Wiley

Published: Mar 1, 2023

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