The recording of financial instruments in the balance sheets of capital market-oriented companies is playing an increasingly important role in the course of globalization. At least since the outbreak of the international banking crisis in 2007, which later developed into a global financial crisis, financial instruments have been under close observation with regard to their accounting. At this point, intangible assets are critical to corporate value and can influence corporate financial policies. The question arises as to whether and to what extent this scope in terms of balance sheet policy is also used by the DAX 30 companies and what risk potential results from this. The aim of this study is to work out the meaning of intangible assets according to international accounting system and to analyze intangible asset developments at DAX 30 companies.
Table of contents
1 Introduction
1.1 Scope of work
2 Definitions of intangible assets
2.1 Identifiability
2.2 Controllability
2.3 Future economic benefits
3 Special forms of intangible assets
4 Recognition
4.1 Acquisition through a government grant
4.2 Acquisition through exchange for intangible asset
4.3 Separate Acquisition
4.4 Acquisition as part of a business combination
4.5 Internally generated intangible assets
4.5.1 Research phase
4.5.2 Development phase
4.6 Original and derivative goodwill
5 Measurement after recognition
5.1 Cost model
5.2 Revaluation model
6 Analysis of company values based on DAX 30 companies
7 Conclusion
8 Bibliography
Objectives and Research Themes
This work aims to examine the accounting treatment of intangible assets under International Financial Reporting Standards (IFRS) and analyze their significance, development, and valuation risks within the context of major listed German corporations (DAX 30).
- Theoretical definitions and recognition criteria for intangible assets under IAS 38.
- Specific accounting regulations for internally generated assets and goodwill.
- Empirical analysis of the relationship between intangible assets, goodwill, and corporate equity.
- Evaluation of balance sheet policy risks and the gap between book value and market capitalization.
Excerpt from the Book
4.5 Internally generated intangible assets
While the fulfillment of the approach criteria is easy to prove at the time of purchase, the assessment is more difficult during the production. On the one hand, it is questionable whether or at what point in time an identifiable intangible asset was created that will generate future economic benefits for the company (IAS 38.51 (a)). On the other hand, the reliable determination of the production costs of the asset is problematic, since in some cases it is difficult to differentiate the costs incurred for internal production from those that lead to the maintenance or increase of the original goodwill (IAS 38.51 (b)).
In addition to the general definition and recognition regulations (IAS 38.8-17, IAS 38.21-23), intangible assets created internally are also subject to the more specific regulations of IAS 38.52-67. Goodwill, which is generated internally, shall not be identified as an asset. (IAS 38.48) They will only be included if generated or purchased individually or separately. In certain situations, spending is incurred in order to create future economic benefits, but this does not result in the formation of an intangible asset that fulfils the recognized requirements outlined in IFRS. Such spending is frequently referred to as contributing to internally produced goodwill. Internally produced goodwill is not considered an asset since it is not a measurable resource owned by the company that can be consistently quantified at cost.
Summary of Chapters
1 Introduction: Provides an overview of the role of intangible assets in the modern economy and outlines the scope of the study regarding IFRS accounting standards.
2 Definitions of intangible assets: Discusses the theoretical framework, identifying criteria, and necessary conditions for an item to be recognized as an intangible asset.
3 Special forms of intangible assets: Categorizes intangible assets into human, structural, and relational assets, illustrating their various manifestations in business.
4 Recognition: Explains the specific accounting procedures for acquiring intangible assets through various means, including government grants, business combinations, and internal generation.
5 Measurement after recognition: Compares the cost model and the revaluation model as methods for the subsequent valuation of recognized intangible assets.
6 Analysis of company values based on DAX 30 companies: Presents an empirical study comparing intangible asset ratios and goodwill across German DAX 30 companies.
7 Conclusion: Summarizes the findings regarding the accounting challenges of intangible assets and the divergence between book and market values in German corporations.
8 Bibliography: Lists the academic and professional sources utilized throughout the study.
Keywords
Intangible Assets, IFRS, IAS 38, Goodwill, Balance Sheet, DAX 30, Accounting Standards, Corporate Value, Financial Statements, Research Phase, Development Phase, Market Capitalization, Equity, Asset Recognition, Valuation.
Frequently Asked Questions
What is the core focus of this publication?
The work focuses on the accounting treatment, definition, and recognition of intangible assets for capital market-oriented companies under IFRS regulations.
What are the primary areas covered in the research?
The study covers the classification of intangible assets, criteria for their recognition, specific rules for self-developed assets, and an empirical analysis of their impact on the balance sheets of DAX 30 companies.
What is the main research objective?
The primary goal is to determine the significance of intangible assets in international accounting and to perform an analysis of how these assets and goodwill develop within major German corporations.
Which scientific methodology is applied?
The study employs a literature review of accounting standards and an empirical quantitative study using data from financial statements of the DAX 30, MDAX, and TecDAX companies.
What topics are discussed in the main part?
The main part covers asset identification, controls, economic benefits, special asset forms, recognition processes for acquisitions versus internal generation, and subsequent valuation models.
Which keywords characterize this work?
Key terms include Intangible Assets, IFRS, Goodwill, DAX 30, Asset Recognition, and Financial Statement analysis.
How is the acquisition of intangible assets treated in business combinations?
Acquisitions in business combinations are governed by provisions in IAS 38 and IFRS 3, often involving the recognition of goodwill when the purchase price exceeds the fair value of net assets.
Why is goodwill significant in the accounting practice described?
Goodwill is seen as a major asset item that reflects future earnings expectations but also poses risks, as evidenced by its high ratio to equity in many companies, necessitating critical impairment tests.
What is the role of the research and development phases for internally generated assets?
Companies must divide projects into research and development phases; costs in the research phase must be expensed, while costs in the development phase may only be capitalized if specific strict criteria are met.
- Citation du texte
- Anonym (Auteur), 2021, Meaning of Intangible Assets in Annual Financial Statement according to IFRS, Munich, GRIN Verlag, https://www.grin.com/document/1325902
