At its September 2000 meeting, the AASB decided to provide interested parties with access to the document Strategy Paper—Intangible Assets through its website, www.aasb.gov.au. In a section entitled ‘Key issues’ the document states:

Some argue that if accounting standards were to not require/allow the recognition of some or all intangible assets as assets, the usefulness of financial reports would be undermined, particularly in the current environment when a substantial value of many entities is purported to be attributable to intangible assets. However, the dilemma for standard setters is that the integrity and therefore usefulness of financial reports will be undermined if intangible assets that do not meet the asset recognition criteria are allowed to be recognised.

REQUIRED

Evaluate the above statement and discuss the relationship between ‘integrity’ and ‘usefulness’. Is the prohibition on recognising certain internally generated intangible assets too arbitrary to achieve a balance between usefulness and integrity?