Assignment 3: Research Project

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Assignment 3: Research Project

Executive Summary

Intangible asset helps to determine and evaluate the overall non-monetary asset of the business organization. The research will help to provide a clear and precise idea about the intangible asset and the rule within the AASB 138 applicable for the intangible asset. The report help to provide a clear and precise definition of the intangible asset which help to clear the basic knowledge of intangible asset and their reporting format in the financial statement of the company.  The recognition criteria and their measurement analysis of the intangible asset re broadly described in the given research which help to provide a platform for the recognition criteria and the measurement of the intangible asset. Finally, the report includes the internally generated intangible asset and their nature along with the example of internally generated intangible asset, which held by the Australian company.

Table of Contents

Executive Summary. 2

Introduction. 4

Analysis. 4

Conclusion. 8

References. 9

Introduction

Intangible Asset are termed as the non-monetary asset which does not have any physical properties, the absence of physical properties does not included or preclude an substance which are being considered to be an asset (Wilkins, 1992). Intangible asset primarily consist of patents, goodwill, masthead, brands names, copyright, innovation with the help of research and development and company trademark. In the financial statement, the intangible asset care categorized separately.

Analysis

Entities sometime expend resource or sometime add liabilities on the overall acquisition, development, maintenance or improvement of overall intangible resource, which are technical or scientific knowledge, design and framework of new method or system (Ballester et.al., 2003). The primary definition of the intangible asset need to assess the asset are intangible and to be identifiable to differentiate it from the overall goodwill. Goodwill is generally determined in the business by devaluating its future benefit, which the business can provide from the available asset.

Recognition criteria of Intangible Asset

The recognition of item, which is intangible in nature, may consist of revenue which are generated from the sale of the good and service produced or manufacture by the respective company (Ballester et.al., 2003). The way of impalpable holdings is such that, largely, there are no increments to such an advantage or substitutions of a piece of it. As needs be, most ensuing consumptions are liable to keep up the normal future financial profits typified in a current immaterial possession instead of meet the meaning of an intangible stake and the differences criteria in this Standard. What’s more, it is frequently hard to credit resulting use specifically to a specific elusive possession instead of to the business overall (Ritter and Wells, 2006). Hence, just infrequently will ensuing consumption – use brought about after the starting differences of a gained impalpable stake or after fruition of an inside created impalpable stake – be perceived in the convey measure of an advantage. Reliably with section 63, consequent consumption on brands, mastheads, distributed titles, client records and things comparable in substance (whether remotely gained or inside created) is constantly perceived in benefit or misfortune as acquired. This is because such consumption cannot be recognized from use to create the business overall.

The recognition criteria of intangible asset generally done with the help of the definition and the recognition criteria, which are as follows,

1) The forecasted future benefit related to economic of the business will add to the overall asset of the company and will flow to the entity.

2) The overall value or the cost of the asset are determined and measure accurately and the values, which are calculated, are reliable.

Measurement of Intangible Asset

An intangible asset is generally measure or determined which is normally starting at cost. However according to the AASB138 standard a nonprofit asset or entities wherever the particular asset is capitalized at zero cost or for a minimum cost , the cost in that case will be the fair value at the present date of acquired asset (Ballester et.al., 2003). Expenditure on internally generated intangible does to recommended for deferral or asset recognition and must be expensed, exception of overall expenditure which are generally incurred on the overall development function which force to indentify the acquired intangible asset in the balance sheet.

The reasonable estimation of impalpable stakes obtained ready to go mixtures can typically measure with sufficient unwavering quality to perceive independently from goodwill. At the point when, for the appraisals used to measure an impalpable possession’s reasonable worth, there is a scope of conceivable conclusions with diverse probabilities, that vulnerability enters into the estimation of the benefit’s reasonable quality, instead of shows a failure to measure reasonable esteem dependably (Wilkins, 1992). On the off chance that an elusive possession gained in a business combo has a limited valuable life, there is a rebuttable assumption that its reasonable worth could measure dependably.

An elusive holding procured in a business mixture may be distinguishable, yet just together with a related unmistakable or immaterial stake. Case in point, a magazine’s distributed title may not have the capacity to sell independently from a related supporter database, or a trademark for regular spring water may identify with a specific spring and could not sold independently from the spring. In such cases, the acquirer perceives the gathering of advantages as a solitary stake independently from goodwill if the individual reasonable estimations of the benefits in the gathering are not dependably measurable.

Nature of internally generated Intangible asset

The nature of the internally generated intangible asset according to AASB 138 will not be recognized and entertained as an asset (Rowbottom, 2002). I.............


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