Accounting for Contingent Liabilities and Intangible Assets

This research report examines the accounting for contingent liabilities and intangible assets in the context of AASB137, AAASB138/IAS38, and AASB136/IAS36. It explains the provisions and disclosure requirements for contingent liabilities, as well as the recognition and impairment of intangible assets. The report also discusses the differences between integrally generated and acquired intangible assets. Additionally, it explores why companies may be reluctant to changes in AASB 138 and IAS 38.

Research Report

EXECUTIVE SUMMARY
The report has been examined the research about the contingent liabilities in the context
of to AASB137. Further, report has described the case study of the Delta Ltd that how can they
follow AASB137 in their organization and also it has been implicated on these lawsuits in their
financial statement. Moreover, research report has been examined the Internally generated
intangible assets and impairment of intangible assets in context of AAASB138/IAS38 and
AASB136/ IAS36. Furthermore, report has described the difference between Integrally
generates intangible assets and acquired intangible assets. At the last it described that how
company cannot follow the AASB 138 and IAS 38.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................4
TASK 1 ...........................................................................................................................................4
1.Explain the accounting for contingent liabilities with reference to AASB137........................4
2.AASB137, how should delta Ltd disclose accounting implication on these lawsuits in its
financial statement as at 31 December 2018...............................................................................4
TASK 2 ...........................................................................................................................................5
3. Internally generated intangible assets and impairment of intangible assets with reference to
AAASB138/IAS38 and AASB136/ IAS36 ..............................................................................5
4.Difference between accounting and integrally generates intangible assets and acquired
intangible assets. .........................................................................................................................5
5.Explain Company may be reluctant for changes in aasb 138 and ias 38................................6
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
AASB is an Australian Accounting Standards Board it is an Australian Government
agency that helps to making the financial report for the private and public sectors. Further, it is
help to develop the budget of the entities for identify the future events of the firm and Australian
economy (Kieso, Weygandt and Warfield, 2016).
The report will examine the accounting for contingent liabilities with reference to
AASB137. Further, describes that how the delta Ltd use this section under their organization.
Moreover, report will highlight the different accounting treatments and internally generated
intangible assets.
TASK 1
1.Explain the accounting for contingent liabilities with reference to AASB137.
Contingent liabilities- is describes that the cases are not clear but the liability of payment is
required in the court cases.
AASB137 is explained that provision contains the warranties and refund policies. It is the
liability of uncertain significant event (Preiato, Brown and Tarca, 2015). Contingent liability is
only the future event That no one can obligate, this is only liability of payment so when company
are liable to payment the amount. It necessary when court is saying that they are obligated to pay
the amount to other party. This is the liability which explained that the liability is the present
obligation this is not currently perceive to be potential or not mediocre with sufficient
convincement.
A contingent liability is identifying when
1. when the result is the past event and entity has current obligation.
2. Making the agreement between the parties to settle the obligation and maintain the
economic benefit.
3. It can be credible scale.
2.AASB137, how should delta Ltd disclose accounting implication on these lawsuits in its
financial statement as at 31 December 2018
Delta Ltd. Uses the AASB137 section under their organization to measure the reliability
of obligation. The amount is claimed was 3 million by the customer and the lawyer of the delta
Ltd has give the advised that the amount is the extortionate and there is high chance to winning

the case. So delta Ltd has pay the maximum $ 500000 amounts and this is the amount of loss so
they disclose the amount in their financial statement in the liabilities side so that means company
pays at least $ 500000 amounts as per the liability of the firm.
TASK 2
3. Internally generated intangible assets and impairment of intangible assets with reference to
AAASB138/IAS38 and AASB136/ IAS36
Intangible assets
Intangible assets is different form the physical assets, also the evaluation is hard as
compare to the tangible assets. There are different types of intangible assets such as patent,
copyright, trademark (Camfferman and Zeff, 2015). Goodwill etc.
AASB 138 contains the IAS 38, it is organized by the international accounting standard
board. So this section is identify that how to company can recognize the amount of intangible
assets in internally. Further also explained that how to set and disclose the amount in the
financial statements.
AASB136 contains the IAS 36, it describes that every company use the intangible assets
in the limited way which means AASB 136 and IAS 36 the Impairment of Assets seeks to
ascertain that a company assets are not much carried the amount higher than their defensive
amount.(I.e. higher of fair value fewer costs of control and value in use). So company can makes
or test and identify the impairment assets of indication of impairment assets.
4.Difference between accounting and integrally generates intangible assets and acquired
intangible assets.
Integrally generates intangible assets
This is the assets of generating the coast of the company because the identifying the
intangible assets cost is increase the cost of research (Hoyle, Schaefer and Doupnik, 2015). This
is increase the research ad development phase so the cost of identifying the integrally generates
intangible assets is high and the expertise of the company is accepted that this is the expenses. So
generally firm can measure and identify the intangible assets in low cost.
Acquired intangible assets
Acquired intangible assets means company acquired the assets during the acquisition and
merger. So these assets it included in the goodwill of company. Further, The price of purchasing

of the acquired business over the specified market value of the net assets is called as an
acquired goodwill.
5.Explain Company may be reluctant for changes in aasb 138 and ias 38
The company may be reluctant for changes in AASB 138 and IAS 38 because the cost
of identifying the intangible assets is high because company research and develops the plan to
estimate the cost of intangible assets (Libby,2017). So that is the reason company cannot much
prefer the AASB 138 and IAS 38. Moreover, there is one more reason why entity reluctant the
changes because the time of identifying the assets is take much time which increase the time of
the company.
CONCLUSION
The conclusion is being drawn form the above research report that describe the two
case study which describe that how company follow the AASB137, AASB 138/IAS 38 and
AASB 136/ IAS36. At the last report has been concluded that firms follow this section to
identify the intangible assets and what the implication of this section in their business. these
section are AAASB138/IAS38 and AASB136/ IAS36.

REFERENCES
Books and Journals
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Camfferman, K. and Zeff, S.A. 2015. Aiming for global accounting standards: the International
Accounting Standards Board, 2001-2011. Oxford University Press, USA.
Preiato, J., Brown, P. and Tarca, A. 2015. A comparison of between‐country measures of legal
setting and enforcement of accounting standards. Journal of Business Finance & Accounting.
42(1-2). pp.1-50.
Libby, R. 2017. Accounting and human information processing. In The Routledge Companion to
Behavioural Accounting Research (pp. 42-54). Routledge.
Kieso, D.E., Weygandt, J.J. and Warfield, T.D. 2016. Intermediate Accounting, Binder Ready
Version. John Wiley & Sons.
Habib, A., 2015. The New C hinese Accounting Standards and Audit Report Lag. International
Journal of Auditing. 19(1). pp.1-14.
Schaltegger, S. and Burritt, R. 2017. Contemporary environmental accounting: issues, concepts
and practice. Routledge.