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Accounting Standard AASB138 Intangible Assets - Essay Example

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Accounting Standard AASB138 Intangible Assets

This means that as much as possible, no pieces and bits of expenses are to be left out. The collection of every amount that went into spending is supposed to be captured as part of the expenditure development (Deegan, 2012). This also entails a mandate whereby accounting for research and development expenses will not be done in isolation. Rather, it is expected that the expenses making up for the two will be integrated as one so as to have a total aggregate of the expenditure. What is more, the AASB138 requires specific items that cover cost of all internally generated intangible assets to be accounted for (66). These would include costs of materials and services, cost of employee benefits, fees to register a legal right and amortisation of patents and licenses (66, a, b, c). There however exist some freebies as far as items to be covered are concerned as there are entities that are encouraged but not necessarily required. These include amortised intangible assets that are still in use and intangible assets that did not match up the recognition criteria in the Standard (128). 2 Explain the rationale behind the different accounting treatments for research and development expenditures. A critical review of the AASB138 shows that there are different accounting treatments given to varying research and development expenditures. Such differences exist for varying reasons....
Secondly, the tangible impact that different research and development expenditure creates is always different and subject to quantitative grading (Accounting Scholar, 2012). For this reason, there exists different accounting treatment for research and development expenditures so that accountants would have the opportunity of undertaking their own assessments of the impacts of expenses so as to undertake effective quantitative grading. In the opinion of Deegan (2012), having the same accounting treatments for all research and development expenditures would only be a way of saying that when quantitative grading is done, all entities will be on the same scale (p. 231) 3 Before the introduction of Accounting Standard AASB 138 Intangible Assets in 2005, Australian companies were allowed to treat research expenditure as an asset and spread the charge against profits over several years. a Examine possible impacts of the introduction of new accounting standards regarding research expenditures to the key elements of companies’ financial statements such as assets, liabilities, equity, income and expenses. With the coming into force of the new accounting standards on research expenditure, one of the key impacts that is expected in terms of financial statements of companies is that there will be an overall change in the technical structure and setup of their financial statements (Deegan, 2012). For example as the new accounting standards brings into force new definitions and categorisations of key entities like assets and expenditure, it is expected that the overall structure of financial standards will change drastically. In terms of assets, it is expected that companies are going to record comparatively reduced volumes of assets than they ...Show more
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The first stipulation given by the AASB138 in reference to accounting for research and development is for amount involved in the said research and development program to be disclosed in an aggregate…
Accounting Standard AASB138 Intangible Assets
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