Accounting And Accountability

Accounting And Accountability

Intangible Assets and the Effects of AASB 138

Individual Assignment

Names: Nilang Shah
Student IDs: S0220398
Subject Code: CO5123
Subject Coordinator: David Smorfitt
Due Date:   5th May, 2009


Table of Contents

Abstract 3
Introduction 3
Intangible Assets: An Overview 3
Accounting for Intangible Assets Pre- and Post- January 2005 4
Changes to Accounting Treatment Caused by AASB 138 6
Independent Reports on the Effects of AASB 138 6
Australian Accounting Review Report 2008 6
PriceWaterhouseCoopers Report on Australian Intangible Assets 2007 8
Student Investigation of Two Industry-Dissimilar ASX-listed Entities 8
How Intangible Assets Affect the Balance Sheet 9
Proportion of Intangible Assets to Total Assets 9
Debt Ratio 11
Return on Assets (ROA) 12
Asset Turnover 13
Further Industry Comparison 13
Conclusion 14
References 16
Appendices 18
Appendix A: Technology One Limited Balance Sheet 2007/2008 18
Appendix B: Technology One Limited Income Statement 2007/2008 19
Appendix C: Domino’s Pizza Limited Balance Sheet 2007/2008 19
Appendix C: Domino’s Pizza Limited Balance Sheet 2007/2008 20
Appendix D: Domino’s Pizza Limited Income Statement 2007/2008 21
Appendix E: Peer Reviews 22



Abstract

Intangible assets have been given a lot of attention by accounting professionals and other parties involved with their financial reporting lately, due to the difficulty they present in being precisely valued, classified and accounted for.   For some companies, intangible assets make up the majority of their total company’s assets; for other companies, intangible assets are very small part of their total assets.   In either case, accounting treatment of intangible assets has seen some interesting twists occur in the accounting world, especially after the introduction of AASB 138 ‘Intangible Assets’ in 2005.   This paper aims to expose some of the new ways intangible assets are being accounted for in financial...