Semester 2 Advanced Accounting: Telstra's Intangible Assets Analysis

This report provides an in-depth analysis of Telstra's intangible assets as depicted in their 2017 financial statements, focusing on goodwill, software assets, licenses, and deferred expenditure. The analysis refers to AASB 138, which governs the accounting for intangible assets, and discusses the increase in the value of these assets over time, reflecting Telstra's investments in licenses and software development. It highlights the company's substantial investment in software assets, internally generated, and the acquisition of spectrum licenses. The report also addresses the limitations on recognizing internally generated goodwill and specific intangible assets like brands and customer lists, as per AASB guidelines. Overall, the report assesses Telstra's compliance with accounting standards in reporting its intangible assets.

Running head: ADVANCE FINANCIAL ACCOUNTING
Advance Financial Accounting
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Table of Contents
Providing description of the intangible assets depicted in the financial statement of Telstra for
2017:...........................................................................................................................................2
References:.................................................................................................................................5

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Providing description of the intangible assets depicted in the financial statement of
Telstra for 2017:
Figure 1: Depicting the intangible assets of Telstra for 2017
(Source: Telstra.com.au, 2018)
The above figure helps in depicting the level of intangible assets, which has been
maintained by Telstra during the fiscal year of 2017. Furthermore, the intangible assets,
which has been maintained by the company are goodwill, software assets, licences, deferred
expenditure, other intangible assets. These identified intangible assets are mainly listed in the
annual report of the company as per the listening of AASB 138 intangible assets. The listed
intangible assets have increased in value over time, which depicts the different operations that
has been conducted by the company for acquiring the licences. Castilla-Polo and Gallardo-

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Vázquez (2016) stated that intangible asset comprises of the components, which is considered
the intellectual property of the company. These intellectual components mainly help in
improving the level of income and operations of the organisation in the long run.
Figure 1: Components of intangible assets
(Source: Telstra.com.au, 2018)
Further information regarding the intangible assets components are depicted from the
above figure. From the evaluation it can be identified that Telstra has been conducting
adequately in software assets, which the development amount invested was at the levels of
$456 million in 2017 and $438 million in 2016. This direct depicts the level of investment,
which the company does in improving its overall intangible assets. Moreover, the total
software assets have been generated internally, which has helped in improving the level
operations that has been conducted by the organisation. The increment in licencing values has
also seen in the annual report of Telstra, which has been conducted for 900 MHz, 1800 MHz
and 2.5 Hz spectrum licences. These licenses haves been acquired for a total $652 million in
2017, which has allowed the organisation for improve its overall operations. Russell (2017)

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stated that companies include intangible assets actual value in their annual report for
identifying the current financial performance of the company.
Telstra Corporation Limited is considered to be one on the largest telecommunication
company, which has been operating in Australia. There are different levels of intangible
assets, which needs to be maintained by organisation for improving their operations in the
long run. The intangible assets such as franchise agreements, patents, copyrights and
trademarks can be adequately adopted by the telecommunication giant, as one of the
intangible assets for its operations. However, the organisation cannot accommodate the level
of goodwill into the intangible assets, as it is not permitted by the AASB ruling, the internally
generated goodwill cannot be listed I the annual report of the company, as intangible assets,
which is depicted in the AASB 138 paragraph 48-50. Furthermore, the organisation also
needs to follow different level of criteria’s for supporting the intangible assets, which needs
to be classified as developing or research phase. In addition, the internally generated brands,
mastheads, publishing titles, customer lists and items similar in substance shall not be
recognised as intangible assets, as depicted in the AASB 138 paragraph 63 (Aasb.gov.au,
2018).

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References:
Aasb.gov.au. (2018). Aasb.gov.au. Retrieved 4 September 2018, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-
15_COMPoct15_01-18.pdf
Castilla-Polo, F., & Gallardo-Vázquez, D. (2016). The main topics of research on disclosures
of intangible assets: a critical review. Accounting, Auditing & Accountability
Journal, 29(2), 323-356.
Russell, M. (2017). Management incentives to recognise intangible assets. Accounting &
Finance, 57, 211-234.
Telstra.com.au. (2018). Telstra.com.au. Retrieved 4 September 2018, from
https://www.telstra.com.au/aboutus/investors/financial-information/reports