Accounting of Intangible Assets

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Advanced Accounting
8/14/2013

Intangible Assets

We come to an age of technology, information, and global competition with a financial accounting model that was fashioned almost 100 years ago. That same accounting model continues to evolve in today’s society. One particular area that continues to evolve in accounting for is with intangible assets. In the business sector of the world assets is important economic resources and is classified as either tangible or intangible. Tangible assets are easily seen as physical objects that include items such as buildings, machinery, vehicles, and fixtures. Because of their nature, tangible assets are straight forward when it comes to accounting for them on the financial statements. However, intangible assets cannot be seen and when it comes to accounting for them, a major issue that has plagued the business world for many years is how to recognize and account for them. What this says is that the financial statements of one company will look different in another territory using their accounting rules. With that being said, this paper will examine how intangible assets are currently viewed and accounted for as well as any changes to the accounting model. Consistent with the definition of assets as service potential or future economic benefits controlled by the entity as a result of past transactions or other past events, this standard specifies that Intangible assets, as a category, must be separately disclosed in the balance sheet. Intangible assets according to are assets which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights) ("Ias 38 - Intangible assets," 2013). Examples of intangible assets: patents, goodwill, brand names, copyrights, research and development, and trademarks. We can divide to categories: Identifiable intangible assets have a specific value that can be placed on each individual asset, and they...
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