Advanced Financial Accounting | Assignment

Added on -2020-02-19

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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced financial accountingName of the studentName of the universityAuthor note
1ADVANCED FINANCIAL ACCOUNTINGTable of Contents(i)Intangible asset of Woolworths..........................................................................................5(ii) Accounting treatment for intangible assets..........................................................................7(iii) Recommendation.................................................................................................................8References................................................................................................................................10
2ADVANCED FINANCIAL ACCOUNTINGThe intangible assets are the assets those are not physical by nature. The corporateproperty in the nature of intellectual those include trademarks, patents, businessmethodologies, brand recognitions, goodwill and copyrights are regarded as intangible assets.as per AASB, the intangible asset is recognized only if (i) it is expected that the economicbenefits for future with regard to the asset will come to the organization with the expectationthat the economic benefit for future will represent the best estimate of the management’seconomic condition and that will subsist over the asset’s useful life through properassumptions and reasonable and (ii) the asset’s cost can be reliably measured (Russell, 2017).Initially the intangible asset is recognized at cost and the cost includes the purchasecost and the cost incurred to bring the asset in a position to its intended use. The cost that isdirect attributable are as follows –Fees paid for registering the legal rightCost of the service or material consumed or used for generation of the intangible assetAmortization of licences or patents used for generation of the intangible assetEmployee benefits related costs that are generated from intangible asset.To analyse whether the intangible asset that is internally generated meets therecognition criteria or not, the asset must be classified into development phase or researchphase. The cost related to research as well as developments are taken into account as andwhen incurred. Further, the company is required to disclose all the amount regarding to theamount of development and research cost that is incurred under each period and for which therevenue statement is prepared (Steenkamp et al., 2016). The intangible asset whether at fairvalue or cost, subjected to the impairment and amortisation testing. Fair value of the asset isestablished through the references from the active market. Further, the revaluations shall beperformed taking into consideration the required regularity in the reporting date and it must
3ADVANCED FINANCIAL ACCOUNTINGbe checked that the asset’s carrying amount is is not materially different from the fair value.Any amount of accumulated amortisation shall be restated based on the gross value ofrevaluationAlternative for potential standard settingThe shareholders stated 4 wide approaches for improving the accounting with regardto the intangible assets. The standard setters and FASB considered the alternatives froverifying the degrees for several years. 4 potential strategies for providing more informationto the financial statement users regarding intangible assets are as follows –Recognize the intangible assets that are internally generated at fair value or cost –Alternative 1Disclose the intangible assets that are internally generated – Alternative 2Adopt the IAS 38 – Alternative 3Recognize the cost of development or research at fair value Intangible asset with indefinite period of useful livesIntangible assets that has indefinite useful life shall not be amortisedAt every period, the company shall test the intangible asset with indefinite useful lifefor the purpose of impairment annually and if there is any sign that the asset may getimpaired that asset shall also be tested (Russell, 2014).At every period, the entity shall assess whether the circumstances or events supportsthe indefinite useful life of the asset. However, if it does not conform, the asset shallbe changed to definite period that can be accounted for as the change on theaccounting estimates as per AASB 108.De-recognition of intangible asset

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