Accounting intangible asset Essay Example | Topics and Well Written Essays - 1000 words

Accounting intangible asset - Essay Example Unlike other accounting procedures which nevertheless aren't so simple either the accounting for the intangible can prove to be a gruesome activity. The most important reason as the term "intangible" might itself suggest that quantifying such an asset would literally mean rationale treatment to the asset which means it would be complete subjective of one to classify them Similarly, just as assets can be quantified and expensed by some definite amount, such can not be applied to the case of intangible. Therefore, it can be just as difficult for the regulatory authorities to come up with a standard which to act as a guideline specially in the case of accounting where considerable discretionary authority lies with the concerned organization.Organizations have over a long period of time argued over their respective accounting policies. To give a clearer picture of it all, let us just touch by as to what actually are intangibles. These might include franchises, brand names, patents and tr ademarks, knowledge asset. However all just mentioned are just part of one the category of intangibles and which might cause lesser problems then much more abstract category of it that is to say "Goodwill" or the difference of the price paid for business and the valuation for of all its assets less all its liabilities. RESEARCH'S VIEW OR THE CONCEPTUAL FRAMEWORK: As clearly specified in the opening the intangibles can be classified as the (i) Identifiable (ii) Non-Identifiable They can be further recognized or go unrecognized as per accounting policies of the concerned organization. REGULATIONS: The most prominent regulations which were able to govern the intangible accounting for sometime was AAS 18 ASRB 1013. Moreover, from 1985 to 1989 Goodwill Accounting Policies were found in the following manifestation. Goodwill was capitalized and amortization was done systematically that is to say Systematic amortization. Goodwill capitalized and amortized. Amortization as an extraordinary item with Goodwill capitalization. Goodwill capitalized with as an asset and no amortization. Rather than amortizing as dangling debt, net goodwill obtained as cumulative deduction from shareholder's equity. A lump sum writing off of Goodwill as an extraordinary item . A lump sum writing off Goodwill against retained earnings and reserves Completely writing off Goodwill as a lump sum in the profit and loss account. Combination of both systematic amortizing goodwill together with a lump sum extraordinary write-off. Combination of both systematic amortizing goodwill together with a lump sum abnormal write off is also made. As taken earlier the two accounting standards AAS 18 and ASRB 1013 has certain implications as to how or to the extent to which the above mentioned categories can be applied as standard operating procedures for intangible assets. The regulations has allowed for allowed for write off only under certain conditions. If on acquisition the amount so acquired may be charged to profit or loss for that matter provided that it does not include goodwill. EMPIRICAL RESEARCH INSIGHTS: Evidence are clear as to the fact that from a period of 1985 to 1989 companies have increasing adopted to capitalization and amortization policy. Similarly, over the same period there has been noticeable and considerable decrease in accounting policy diversity as evidence suggest. Trademarks and trade names have had the greatest increase in the recoginition as identifiable intangibles. Despite the increase in companies adopting the policy of capitalization without any amortization, there has been a relative increase in the number of companies adopting the policy of lump sum extraordinary writoff. A smaller percentage has also adopted to a mixed policy as well.