Contemporary Issue Relating to Accounting

This presentation discusses the concepts relating to the accounting conceptual framework, accounting provisions for intangible assets issued by IASB, and the measurement process of intangible assets. It explores the selection between the historical cost method and fair value method for valuing intangible assets.

CONTEMPORARY ISSUE RELATING
TO ACCOUNTING
Student name:
University name:

INTRODUCTION
Hello everyone, Today, we are going to discuss about --
• The concepts relating to the accounting conceptual framework.
• The accounting provisions for intangible assets that are issued by IASB.
• In the case of intangible assets, the general procedures of valuation are issued under the provision of
AASB 138.
• Here the main issue that is faced by both the companies, relating to the measurement process of
intangible assets.
• Selection between the historical cost method and fair value method in case of valuation of intangible
assets.

OVERVIEW OF ACCOUNTING CONCEPTUAL FRAMEWORK AND AASB
• The conceptual framework is relating to Financial Reporting, generally, point out the concepts of
preparation and presentation of financial statement.
• The conceptual framework is clearly defines the main objectives and user of financial statements.
• It is provides the consistency of comprehension and also provides a base of discussion for the
practitioners.
• AASB is usually representing the principles and guidance relating to the valuation of assets of an
organization.
• In case of intangible assets the valuation procedures are issued by AASB 138.
• In cost model an intangible asset is valued at cost less any accumulated amortisation or impairment
losses.
• In revaluation model intangible asset is valued at a revalued amount, i.e. fair value at the date of
revaluation less any subsequent accumulated amortisation or impairment losses.

EXAMPLE: Intangible asset valuation ( perpetuity)
• Perpetuity is a financial service firm.
• The intangible asset for such company is the goodwill.
• The goodwill is representing the value that exceeds the assets minus the liabilities. It is recorded
when the purchase price is greater than the fair value of assets and liabilities.
• In case of valuation of goodwill, the fair value of goodwill at the date of revaluation will deducted
from any subsequent accumulated amortization or impairment losses.
• In the AASB 138, provided the provisions relating to the valuation of intangible assets, in case of
acquired in a business combination need to use the fair value system.
• Followed the provision the company need to follow the fair value system as it is representing the
present market value.

EXAMPLE (CONTINUE): Intangible asset valuation (The Minutisr)
• The Minutisr is the newspaper manufacturer company.
• As it’s the intangible assets normally representing the logo, fonts, design of the newspaper heading.
• For Minutisr, using the historical cost method’s implementation enhances the reliability of
accounting information and amounts are easily verifiable.
• Comparing with the fair value method, the application of the historical cost method is cheaper.
• According to the provisions provided under AASB 138, in case of internally generated intangible
assets normally valued at cost.
• The cost is calculated through the sum of expenditure that was incurred from the date when such
assets recognized in the balance sheet.
• For Minutisr implementation of historical cost, the method is effective instead of fair value system.
The fair value system normally presenting the market value of assets, which not be beneficial for
Minutisr.

REFERENCES:
IASB,(2019).[eBook]pp.5872.Availableat:http://archive.ifrs.org/CurrentProjects/IASB
Projects/ConceptualFramework/Documents/May%202015/ED_CF_MAY%202015.pdf
[Accessed 11 Sep. 2019].
Barker, R., 2015. Conservatism, prudence and the IASB's conceptual framework.
Accounting and Business Research, 45(4), pp.514-538.