Evaluation of Intangible Assets under AASB 136/IAS 38

This assessment evaluates the intangible assets of Technology Enterprise under AASB 136/IAS 38. It discusses the accounting treatment and regulations for preparing the annual report.

Running head: ACCOUNTING & FINANCIAL MANAGEMENT
Accounting & Financial Management
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTING & FINANCIAL MANAGEMENT
Executive Summary:
The assessment aims in evaluating the intangible assets of Technology Enterprise under AASB
136/IAS 38. The Australian organization preparing the annual report, needs to follow the
relevant regulations regarding the intangible assets of AASB 138/IAS 38. The overall proceeding
that needs to be allowed by Technology Enterprise Ltd is mainly depicted in the assessment.
Moreover, the overview of the accounting treatment that is needed for preparing the annual
report are adequately depicted.

2ACCOUNTING & FINANCIAL MANAGEMENT
Table of Contents
Introduction:....................................................................................................................................3
1. Indicating how the project be accounted for in the financial statements for the year ended 30
June 2018, while justifying the answer with relevant paragraph AASB 138/IAS 38:....................3
2. Indicating to what extent might the rules or restrictions in AASB 138/IAS 38 reduce the
comparability of financial statements:.............................................................................................5
3. Writing a relevant response to the CEO, drawing on the understanding of AASB 138/IAS 38
and the efficient market hypothesis:................................................................................................5
Conclusion and recommendation:...................................................................................................6
References:......................................................................................................................................7

3ACCOUNTING & FINANCIAL MANAGEMENT
Introduction:
The overall assessment aims in evaluating the difference accounting standards that has
been imposed by AASB and IAS of Australia on the financial performance of the organization.
In addition, the relevant evaluation of the standards that needs to be followed by the
organization, while valuing the intangible assets are depicted in the assessment. Moreover, the
Australian organization preparing the annual report, needs to follow the relevant regulations
regarding the intangible assets of AASB 138/IAS 38. The overall proceeding that needs to be
allowed by Technology Enterprise Ltd is mainly depicted in the assessment. Moreover, the
overview of the accounting treatment that is needed for preparing the annual report is adequately
depicted. The measure and recognition criteria are adequately depicted in the AASB 138, which
allows the organization to detect the fair value of their intangible assets.
1. Indicating how the project be accounted for in the financial statements for the year
ended 30 June 2018, while justifying the answer with relevant paragraph AASB 138/IAS
38:
The overall the financial performance of the techniques if present value can be used for
estimating the project present value in order to determine the actual value of the organization. In
addition, the valuation of the new R&D is mainly at the levels of $4,000,000, while using the
present value techniques the overall fair values of the design is mainly estimated to be at the
level of $3,000,000. In addition, Technology Enterprise Ltd needs to take into account the
different level of accounting standards that is been conducted by AASB for adequately preparing
the annual report of the organization (Fraser 2018). The following standard are depicted as
follows.
Using the intangible asset recognitions: The company in accordance with the AASB standard
needs to recognize their intangible assets in the financial report. Moreover, the AASB standard
138 and IAS 38, paragraph 21 directly indicates that the overall intangible assets needs to be
accommodated by the organization in their annual report to depict the accurate level of assets
that is been used by the company during the financial year. The overall valuation of the
intangible assets has directly stated that the valuation of the cost and expenses incurred from
benefits of the company is less any kind of research cost. Therefore, the overall expenses of
$1,000,000 will be conducted on the annual report of Technology Enterprise Ltd for the expense
that has been conducted on the R&D (Steenkamp and Steenkamp 2016).
Particulars Amount (in $)
Cost of time incurred searching for and analysis of alternative materials 100,000
Cost of time for design of models and construction and testing of protocols 700,000
Cost of time incurred on training maintenance staffs for new design 200,000
Total cost incurred 1,000,000
The above table provides information about the salary expenditure based on the
engineer’s time sheet. Therefore, the data presents the overall accumulated the salaries of all

4ACCOUNTING & FINANCIAL MANAGEMENT
engineers involved in project during the end of the financial year of 30 June 2018. Thus, under
the standard AASB 138/IAS 38 the overall cost involved in developing the intangible assets of
the organization, which needs to be listed in the income statement of the company. Therefore, the
overall cost of $1,000,000 will be listed on the income statement of the organization expense,
while after the recognition the intangible asset will be presented in the assets section of the
balance asset.
Measuring the intangible asset: Moreover, Technology Enterprise Ltd needs to be adequate
measure their intangible assets before reporting, it on their annual report. This measurement
directly allows the organization to depict accurate value of their financial performance in the
long run. Hence, Technology Enterprise Ltd needs to be provide relevant information about the
internally generated assets at the value of $4,000,000. In accordance with the AASB 1398/ IAS
38, paragraph 24, companies need to conduct relevant measurement of their intangible assets at
cost for accurately depicting the current valuation of the company financial position to the
investors. Furthermore, the standard also indicates that the overall cost of firm that is concocted
on R&D needs to be disclosed in the financial report of the company under the income
statement, as it is conceited to be at the sunk cost (Bond, Govendir and Wells 2016).
Furthermore, the relevant evaluation has also indicated that the overall goodwill
generated from the acquisition process need to be disclosed under the AASB 138/IAS 38. The
goodwill is generated to be the organization during the acquisition process is detected by
subtracting the overall fair value of the assets with the total acquisition amount. The extra
amount of money paid by the organization for the net assets is considered to be the goodwill,
which comes under the section of intangible assets.
IASB 138/IAS 38: In addition, adequate standard is depicted by AASB regarding the
measurement and calculation of the non-monetary assets that company needs to be conducted for
measuring their intangible\ assets. The definition of the measure that needs to be taken by the
organization is adequately depicted in the AASB 138/IAS 38. Furthermore, the standard provides
relevant measure that needs to be taken into account for providing the information of the
intangible assets in their annual report. Moreover, the disclosures are also provided regarding the
measure that needs to be taken into consideration on the internally generated intangible assets,
which will be generated on the annual report of the organization (Hu, Percy and Yao 2015).
Asset development: Moreover, adequate evaluation has been conducted on AASB 138/IAS 38
regarding the measure that needs to be taken into considered for the assets that is been developed
after completion of the research phase. The standard has mainly indicated that the organization
can recognize the asset only after providing relevant technical feasibility of the asset that has
been developed by the company. Moreover, the company also need to use adequate accounting
standards for adequately depicting the values of the assets in the balance sheet. In the case
summary the overall value of $4,000,000 needs to be disclosed by Technology Enterprise Ltd in
the annual report to depict the feasibility of the analysis (Russell 2017).
Research cost: In accordance with Paragraph 8, AASB 138/IAS38, companies can adequately
provide relevant information about the research cost of the technology that is been developed in
their annual report. Furthermore, the relevant valuation has mainly conducted that Technology
Enterprise Ltd for disclosing the actual research cost of has been conducted to increase the
battery life.

5ACCOUNTING & FINANCIAL MANAGEMENT
2. Indicating to what extent might the rules or restrictions in AASB 138/IAS 38 reduce the
comparability of financial statements:
The AASB standards has been developed for reducing the overall comparability that
could be conducted on the annual report of the organizations. In addition, the comparability is
considered to be one of the significant characteristics of the financial statements. The financial
performance of the organization could be analyzed with the AASB, where relevant measure has
been estimated by the standard for minimizing the negative impact of comparability of financial
statements. The major prices have been depicted about the acquisition process, which can be
used by companies for valuing their intangible assets their business combinations and measures
of goodwill at cost value. Hence, the relevant measures are taken into considerations by AASB
for valuing the intangible assets, as they cannot be determined on monetary terms. Moreover, the
information of intangible assets varies with the companies and he benefits it could provide to the
organization in the long run. Hence, the organization needs to follow adequate measure for
disclosing the relevant expenses incurred by the organization related to the assets as expenses
(Russell 2017).
Moreover, the profits of the organization need to be recognized on the similar basis, as
depicted in AASB 138/IAS 38. Moreover, the AASB 138/IAS 38 has mainly indicated that the
total intangible assets that the company acquires needs to be disclosed in the annual report.
Moreover, the organization need to capitalize the cost incurred for the research and development
of the asset in their annual report for detecting the actual value of the assets in the annual report.
Moreover, the information of the organization in the financial statement can be compared with
the financial information of other companies or different timelines of the same company.
Moreover, the different measures that is discussed by AASB the overall recognition,
measurement and valuation of the intangible assets of the company majorly differs with the same
aspects of other companies. Hence, the intangible asset valuation of the company is relevantly
different for other companies, where relevant material impact on the financial statement can
occur (Su and Wells 2018). The AASB 138 standard directly provides scope for the organization
to measure their intangible assets in accordance with their process, as there is no specify
measurement listed in AASB. This mainly helps in reducing the level of comparability between
the annual reports of companies using the same intangible assets in their annual report
In the relevant case, it can be detected that Technology Enterprise Ltd can value their
intangible asset, as the recognition, valuation and measurement method depicted in AASB
138/IAS 38. The overall intangible assets valuation needs to be conducted by adequately
segregating the sunk cost, which is the overall development and research cost of the asset.
Moreover, the development of an asset needs to be considered as expenses in the income
statement for Technology Enterprise Ltd needs to be capitalized it in the annual report (Tran and
Zhu 2017).
3. Writing a relevant response to the CEO, drawing on the understanding of AASB
138/IAS 38 and the efficient market hypothesis:
The AASB is liable to provide companies of Australia, which is listed in ASX with
relevant standards that could be used for improving the overall treating their assets and liabilities
in their annual report. In addition, the AASB 138/IAS 38 is mainly provided by the AASB for

6ACCOUNTING & FINANCIAL MANAGEMENT
ensuing the retreatment of intangible assets and other aspects of the assets. In addition, the
AASB 138 is directly used for analysis the intangible assets that are identifiable as well as non-
monetary assets, which the organizations have in their annual report. Moreover, the AASB
standard directly indicates that the intangible assets that identified as the assets of the
organization must be divisible from the firm such a manner that they could be sold or exchanged
in the market (Cheung and Lau 2016).
In addition, the AASB 138/ IAS 38 directly provides information about the business,
which can be allow the organization to directly segregate the intangible assets that is integrated
in the internal process of the company. In addition, the goodwill of the organization is mainly
value, analyzed and measured under the AASB 138/ IAS 38. Moreover, the standard also
indicates that the depiction of the fair value of assets will directly indicate economic benefit that
would be generated from the assets by the organization. Furthermore, the AASB 138/IAS 38
indicates that the overall business organization needs to prove the technical feasibility of the
asses before identifying it in the balance sheet of the organization. The organization under the
standard can recognized the benefits that will be generated in future by the intangible assets
(Powell and Hope 2018).
Conclusion and recommendation:
The overall assessment directly provides relevant information about the accounting
policies, financial reporting and financial regulations, which needs to be followed by
organization while preparing the annual report. Moreover, adequate information is provided
regarding the intangible assets of Technology Enterprise Ltd, which helps in determining the
relevant cost and valuation of the assets in the annual report. Moreover, the intangible assets
valuation, measurement and recognition mainly depicted in the assets, which can be used by
Technology Enterprise Ltd while preparing the annual report. Hence, Technology Enterprise Ltd
needs to make relevant valuation and estimation of the financial assets for determine the
financial viability of the same assets. Therefore, the company needs to follow certain regulations
and rules, while providing relevant disclosures and compliance of the financial assets. Thus,
Technology Enterprise Ltd needs to provide adequate disclosures regarding the financial assets
under the assets of the annual report.

7ACCOUNTING & FINANCIAL MANAGEMENT
References:
Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairment decisions by
Australian firms and whether this was impacted by AASB 136.
Cheung, E. and Lau, J., 2016. Readability of Notes to the Financial Statements and the Adoption
of IFRS. Australian Accounting Review, 26(2), pp.162-176.
Fraser, J., 2018. Alternative assets insights: Budget announcements thin capitalisation. Taxation
in Australia, 53(2), p.90.
Hu, F., Percy, M. and Yao, D., 2015. Asset revaluations and earnings management: Evidence
from Australian companies. Corporate Ownership and Control, 13(1), pp.930-939.
Malone, L., Tarca, A. and Wee, M., 2016. IFRS non‐GAAP earnings disclosures and fair value
measurement. Accounting & Finance, 56(1), pp.59-97.
Powell, K. and Hope, M., 2018. Shifting digital currency definitions: current considerations in
Australian and US tax law. eJTR, 16, p.594.
Russell, M., 2017. Management incentives to recognise intangible assets. Accounting &
Finance, 57, pp.211-234.
Steenkamp, N. and Steenkamp, S., 2016. AASB 138: catalyst for managerial decisions reducing
R&D spending?. Journal of Financial Reporting and Accounting, 14(1), pp.116-130.
Su, W.H. and Wells, P., 2018. Acquisition premiums and the recognition of identifiable
intangible assets in business combinations pre-and post-IFRS adoption. Accounting Research
Journal, 31(2), pp.135-156.
Tran, A. and Zhu, Y.H., 2017. The impact of adopting IFRS on corporate ETR and book-tax
income gap. Austl. Tax F., 32, p.757.