Intangible assets Research Paper Example | Topics and Well Written Essays - 750 words

Intangible assets - Research Paper Example The increased globalization of international trade and investment has been accompanied by adoption of International Financial Reporting Standards IFRS by many countries. Other reasons for the adoption of IFRS are that international investors can access and understand more information with regards to capital markets and financial statements. In addition, adoption of IFRS decreases the cost of doing business across borders. There are differences on the reporting requirements between US GAAP and IFRS. Firstly, US GAAP differentiates specific financial instruments that are liabilities if they fall within the categorization of being both debt and equity. On the other hand, IFRS requires that such categorization should focus on whether there are contractual obligations involved in delivery of an organization’s own equity shares, cash or assets2. Another key difference relates to the presentation of financial statements. IFRS requires the preparation of a third balance sheet with related notes at the start of the comparative period where an entity restates the financial statements or adopts a new accounting policy. Meanwhile, there are no such requirements under the US GAAP. IFRS forbids presentation of extraordinary items in income statements whilst the US GAAP is confined to unusual and infrequent entries. Under stock costing methods, IFRS is strictly prohibited while under US GAAP LIFO is allowed, but a consistent cost formula must be used. The measurement of stock uses the lower cost of market value in US GAAP whilst IFRS values inventory at the net realizable value or the lower cost 3. The concept of intangible assets is found under US GAAP in (ASC 350) intangibles Goodwill and others (ASC 805) Business combinations and (IFRS 38) Intangible Assets or IFRS 3(R) Business Combinations. Similarly, both systems view intangible assets as identifiable non monetary assets without physical substance. Identifiable