Understanding AASB 138/IAS 38 for Financial Accounting

Running head: FINANCIAL ACCOUNTING ASSIGNMENT
Financial Accounting
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FINANCIAL ACCOUNTING ASSIGNMENT1
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
AASB 138/IAS 38.......................................................................................................................2
Recognition of Intangible Assets.................................................................................................3
Measurement of Intangible Assets...............................................................................................3
Research Costs.............................................................................................................................4
Development of Asset..................................................................................................................4
Comparability of AASB138/IAS 38............................................................................................5
Understanding of AASB 138/IAS 38..........................................................................................6
Recommendations............................................................................................................................7
References........................................................................................................................................8

FINANCIAL ACCOUNTING ASSIGNMENT2
Introduction
Technology Enterprises Ltd is a listed Company that is working on a research and
development project whereby the company is undertaking a project for the purpose of analysis
and including the same in the financial budgeting process. The company carried on a research
and development process whereby the company would do the method of recharging batteries for
the next two-years and the expected economic benefits that the company expects to receive from
the same would be for 10-years (Ramachandra 2017).
Discussion
The present value of the project can be well estimated using the present value technique
for the purpose of determining the actual fair value that will be received by the company. The
estimated fair value of the project was around $4,000,000. On the other, hand the fair value of
the research or the patent had a total value of around $3,000,000. There is a substantial
difference between the reported value and market capitalisation of the stock, which states the fair
value of the company. The difference can be well accounted for the various reasons whereby the
balance sheet of the company contains various assets and liabilities in the form of historical, fair
value and cost value.
AASB 138/IAS 38
AASB 138/IAS 38 define the intangible assets of the company as intangible non-
monetary assets, which are not having any physical substance. The key features of intangible
assets is that its existence is not clear in the form of physical substance and non-monetary in
nature. The AASB 138/ IAS 38 defines the monetary and non-monetary assets of the company
and subsequently (Steenkamp and Steenkamp 2016). The intangible assets of the company can