Contentious issues in accounting for intangible assets
Fourie, Helena Sophia
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Intangible assets have always been a prevailing concept within the economic milieu and hence in the accounting domain, but it has not been a prominent aspect, or even regarded as an asset, since the emphasis in the economic environment was invariably cast on property, production facilities and equipment. Economic development and progress over the last +I- 30 years have plunged the issue of intangible assets into the limelight and it has now become a bone of contention in the doings of the financial accounting operating arena. One has to look closely at the driving forces of the current economic environment to grasp the newfound impetus that brought the issue to the fore. The economic playground of the new millennium has all sorts of toys to toss around, such as information, innovation, services and relationships. The common denominator among these driving forces lies in its intangibility. Users of accounting tools have stumbled across a significant dilemma by raising their disquietude about the relevancy of financial statements where intangible assets are concerned. There are resounding claims that intangible assets are not exhibited accurately in the financial statements of companies. The general objective of the research project has been to single out certain aspects concerning the topic of intangible assets and to assert how the accounting fraternity is dealing with the situation at hand. The study embraced the following aspects: *A literature study; *Empirical research by means of a structured questionnaire that gathered data about certain identified aspects of intangible assets and measuring how it is handled by the respondents in the marketplace; and *Telephonic interviews with key banking officers in the bank sector in South Africa. The findings of the questionnaires were used to flag crucial aspects of intangible assets and to identify the ensuing approach needed to handle intangible assets within the accounting body of knowledge. The results have shown that the recognition of and reliably measuring intangible assets have become a dilemma that is, in all probability, here to stay for a while to come. Users that responded in the empirical study clearly indicated that the reliable measurement of intangible assets outweighs the relevancy of information about intangible assets. On the strength of the results of this study, by word of the users of financial statements, the recommendation is posed that relevant, additional information regarding intangible assets should be attached to the financial statements, or that additional notes should be provided. Moreover, a supplemental recommendation entails that the classification and the recognition criteria of accounting standards should be revisited in order to establish clearer guidelines for the identification and recognition of intangible assets.
- ETD@PUK