Accounting for intangible investments

Wyatt, A; Abernethy, M

Accounting for intangible investments

Wyatt, A Abernethy, M

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Publisher:: CPA Australia
Publication Type:: Journal Article
Citation:: Australian Accounting Review, 2008, 18 (2), pp. 95 - 107
Issue Date:: 2008-01

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Field	Value	Language
dc.contributor.author	Wyatt, A	en_US
dc.contributor.author	Abernethy, M	en_US
dc.date.issued	2008-01	en_US
dc.identifier.citation	Australian Accounting Review, 2008, 18 (2), pp. 95 - 107	en_US
dc.identifier.issn	1035-6908	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10087
dc.description.abstract	The traditional categorisation of expenditures evident in many firms' charts of accounts and financial statements does not identify and measure expenditures on intangible investment separately from tangible investment and operating expenditures. This contrasts with the accounting for tangible investment, which separately accounts for all expenditures as assets unless the future benefits are consumed in a single accounting period. Further, in searching for better ways to account for intangibles, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets. In this paper, we argue that identifying and separately reporting the expenditures on intangible investment is the logical first step in accounting for intangible investments. Learning about the firm's categories of value driving (and sometimes potentially value destroying) expenditures has important implications for understanding aspects of the value chain, performance measurement, valuation, corporate governance and the external audit. There are significant expenditures invested in intangibles including resources such as human capital, the long-term customer base, product and process related technologies, information technology, and brands and intellectual property.1 To date, the traditional categorisation of expenditures evident in many firms' charts of accounts and the financial statements does not identify and measure expenditures on these intangibles separately from expenditures on tangible investment and current production (operating expenditures).2 This contrasts with the accounting for tangible investment, which separately accounts for all expenditures not consumed in a single accounting period as assets. In searching for better ways to account for intangibles, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets.	en_US
dc.publisher	CPA Australia	en_US
dc.relation.ispartof	Australian Accounting Review	en_US
dc.relation.isbasedon	10.1111/j.1835-2561.2008.0012.x	en_US
dc.title	Accounting for intangible investments	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	18	en_US
utslib.for	150103 Financial Accounting	en_US
utslib.for	1499 Other Economics	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Strength - CCG - Centre for Corporate Governance
utslib.copyright.status	closed_access
pubs.consider-herdc	true	en_US
pubs.issue	2	en_US
pubs.volume	18	en_US

Abstract:

The traditional categorisation of expenditures evident in many firms' charts of accounts and financial statements does not identify and measure expenditures on intangible investment separately from tangible investment and operating expenditures. This contrasts with the accounting for tangible investment, which separately accounts for all expenditures as assets unless the future benefits are consumed in a single accounting period. Further, in searching for better ways to account for intangibles, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets. In this paper, we argue that identifying and separately reporting the expenditures on intangible investment is the logical first step in accounting for intangible investments. Learning about the firm's categories of value driving (and sometimes potentially value destroying) expenditures has important implications for understanding aspects of the value chain, performance measurement, valuation, corporate governance and the external audit. There are significant expenditures invested in intangibles including resources such as human capital, the long-term customer base, product and process related technologies, information technology, and brands and intellectual property.1 To date, the traditional categorisation of expenditures evident in many firms' charts of accounts and the financial statements does not identify and measure expenditures on these intangibles separately from expenditures on tangible investment and current production (operating expenditures).2 This contrasts with the accounting for tangible investment, which separately accounts for all expenditures not consumed in a single accounting period as assets. In searching for better ways to account for intangibles, regulators and researchers have focused on the accounting choice problem relating to the existence and recognisability of intangible assets.

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http://hdl.handle.net/10453/10087