Intangible Assets - Woolworths limited
Intangible Assets:
An intangible asset, despite not having a physical form to it, has great value to a company and is to be disclosed in the financial reports. Some companies only disclose the brand and goodwill as their only intangible assets, while others include more such as software and the company trademarks (Loftus et al. 2012). The Accounting Standard AASB 138 advises businesses on the accounting treatment of these intangible assets, but only if the specific criteria have been met for an asset to be recognized as intangible. An intangible asset must encompass three characteristics:
Identifiable:
An asset has to meet one of the following in order to be considered identifiable. It has to be separable, so that it is recognizable to be different than goodwill. This means it is capable of being sold, licensed, rented, transferred or exchanged, resulting with separation from the business. Or it has to arise from contractual or other legal rights, whether it is separable or not (AASB 2010).
Non-monetary in nature:
The asset has to be non-monetary. This characteristic is required so that receivables are not considered as an intangible asset by businesses just because the money has been recognized but not received yet (Loftus et al. 2012).
Lack of physical substance:
This is required so that tangible assets of property, plant and equipment are not being recognized as an intangible asset (Loftus et al. 2012).
Also, an asset is strictly only recognized as intangible if it meets both of the following in the recognition criteria:
(a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
(b) The cost of the asset can be measured reliably (AASB 2010)
Classes of intangible assets:
A class is a group of intangible assets that are of similar nature. Some examples of classes include Brand names, Computer software or Licenses and Franchises, just to name a few.
Compliance
An intangible asset, despite not having a physical form to it, has great value to a company and is to be disclosed in the financial reports. Some companies only disclose the brand and goodwill as their only intangible assets, while others include more such as software and the company trademarks (Loftus et al. 2012). The Accounting Standard AASB 138 advises businesses on the accounting treatment of these intangible assets, but only if the specific criteria have been met for an asset to be recognized as intangible. An intangible asset must encompass three characteristics:
Identifiable:
An asset has to meet one of the following in order to be considered identifiable. It has to be separable, so that it is recognizable to be different than goodwill. This means it is capable of being sold, licensed, rented, transferred or exchanged, resulting with separation from the business. Or it has to arise from contractual or other legal rights, whether it is separable or not (AASB 2010).
Non-monetary in nature:
The asset has to be non-monetary. This characteristic is required so that receivables are not considered as an intangible asset by businesses just because the money has been recognized but not received yet (Loftus et al. 2012).
Lack of physical substance:
This is required so that tangible assets of property, plant and equipment are not being recognized as an intangible asset (Loftus et al. 2012).
Also, an asset is strictly only recognized as intangible if it meets both of the following in the recognition criteria:
(a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
(b) The cost of the asset can be measured reliably (AASB 2010)
Classes of intangible assets:
A class is a group of intangible assets that are of similar nature. Some examples of classes include Brand names, Computer software or Licenses and Franchises, just to name a few.
Compliance