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An accounting perspective

chapter
posted on 2006-07-27, 00:00 authored by Anne WyattAnne Wyatt
THE ACCOUNTING DEFINITION Intangible capital (IC) and intellectual property (IP) are not specifically defined in accounting regulations. Instead, as productive resources (or inputs), the individual components of IC and IP are reported as assets on the balance sheet if the asset definition and the asset recognition rules in the accounting regulations are satisfied. Definition and recognition rules in the accounting regulations are applied in a two-stage process. We first apply the definition rules and, if these are satisfied, the second stage is to then apply the recognition rules. Satisfying the ‘definition’ rules means the item has attributes that fit the definition criteria. Satisfying the ‘recognition’ rules means that this item meets the recognition rules and can therefore be recorded in the financial statements – one or more of the profit and loss statement, balance sheet, and cash flow statement. The alternative to recognition is disclosure. ‘Disclosure’ means that either quantitative or qualitative information about the item is included in the explanatory notes to the financial statements. However, the item is not recorded in the accounting system or reported in the financial statements. 1.1 Definition According to the International Accounting Standards Board (IASB),1 in their Framework for the Preparation and Presentation of Financial Statements (the Framework), an asset is defined as ‘a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the...

History

Title of book

The Management of Intellectual Property

Series

New Horizons in Intellectual Property Series

Chapter number

3

Pagination

40 - 65

Publisher

Edward Elgar Publishing Limited

Place of publication

Gloucester, Eng.

ISBN-13

9781845421120

ISBN-10

1845421124

Language

eng

Publication classification

B1.1 Book chapter; B Book chapter

Copyright notice

2006, Derek Bosworth and Elizabeth Webster

Extent

15

Editor/Contributor(s)

Derek Bosworth, Elizabeth Webster

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