Accounting Standards AASB 138 and AASB 136: Intangible Assets and Impairment of Assets

This presentation discusses the provisions of AASB 138 and AASB 136 in relation to intangible assets and impairment of assets. It covers the definition of intangible assets, accounting treatment for acquired patents, and the concept of asset impairment. The presentation concludes with recommendations for best practices.

Transcript
Module Number-
[DATE]
[Company name]
[Company address]

Table of Contents
Video Slide-1.........................................................................................................................................2
Video Slide-2.........................................................................................................................................2
Introduction.......................................................................................................................................2
Video slide-3.........................................................................................................................................2
Provisions of AASB 138, Intangible Assets:.....................................................................................2
Video-4..................................................................................................................................................2
Video-5..................................................................................................................................................3
Issue-2 AASB 136, Impairment of Assets.........................................................................................3
Video-6..................................................................................................................................................3
Conclusion.........................................................................................................................................3
References.............................................................................................................................................4

Video Slide-1
Cover page
Video Slide-2
Introduction
 This presentation has been prepared to research upon the research based upon the accounting
standard in relation to AASB 138, Intangible Assets; AASB 136, Impairment of Assets;
AASB 116, Property, Plant & Equipment; AASB 1041, Revaluation of Non-current Assets.
 The presentation focuses upon relation to the Accounting of Intangible Assets and the
discussion of treatment of the value of company’s factory machines.
Video slide-3
Provisions of AASB 138, Intangible Assets:
 As per the Paragraph 9 of AASB 138, the items which constitute the definition of intangible
assets include the enhancement, acquisition, development and maintenance of patents, and
scientific or technical knowledge.
 As per Paragraph 23, the estimation of these economic benefits is taken into account
considering the external evidence mainly (Russell, 2017).
 As per Paragraph 52, the research phase and development phase of the internally generated
intangible asset has to be differentiated.
Video-4
Appropriate accounting procedure for the accounting issues identified
 Patent HDBG459 has been acquired by the company (Shadow Limited) from a leather
manufacturing firm at $541 000
 The patent is able to be recognised as intangible asset. The recognition as per Paragraph 24
shall be done at acquisition cost
 The acquired Patent UBF871 qualifies the definition of intangible asset as per Paragraph 9 of
AASB 138 hence the same can be accounted as an intangible asset.

 The patent has not been considered as an intangible asset as it is not acquired yet. As the asset
has not been created yet, it cannot be evaluated for considering as an intangible asset.
 The recognition can be made if those conditions are specified under the AASB 138.
Video-5
Issue-2 AASB 136, Impairment of Assets
 The application of this accounting standard disallows the organisation from carrying any of
its assets on a value which exceeds the recoverable amount of them
 As per the provisions of this asset, asset impairment can take place when the indicators of
impairment are available which could either be external or internal as well (Bond, Govendir,
& Wells, 2016).
 The recoverable amount of the assets is computed by comparing the value in use and fair
value less cost of disposal. Developed reforms in the operating environment.
 Higher of either of them is selected as the recoverable amount (Zhuang, 2016).
 This impairment testing has to be conducted by the organisation at every reporting date and
the impairment loss cannot be eliminated to be considered in the financials if the impairment
indicators exist.
Video-6
Conclusion
 The issues have been resolved keeping in line the practical implications of the solution of
issues upon the working and presentation of financial statements by the organisation.
 The concerns of patent accounting both acquired as well as internally generated along with
the depreciation charge had been resolved
 The recommendation about the best acceptable and available option is suggested.

References
Bond, D., Govendir, B., & Wells, P. (2016). An evaluation of asset impairments by Australian firms
and whether they were impacted by AASB 136. Accounting & Finance, 56(1), 259-288.
Russell, M. (2017). Management incentives to recognise intangible assets. Accounting &
Finance, 57, 211-234.
Zhuang, Z. (2016). Discussion of ‘An evaluation of asset impairments by Australian firms and
whether they were impacted by AASB 136’. Accounting & Finance, 56(1), 289-294.