In 1999 the Group of 100 (G100), an Australian group representing senior executives from large Australian companies, made a submission to the Australian Accounting Standards Board. They were worried about the ‘strict’ rules incorporated in IAS 38 and were concerned that similar rules might be embraced in Australia, particularly in regard to the amortisation of intangibles. In its submission, the G100 stated:

Were Australian companies to amortise all their identifiable assets, they would have considerably lower, if any, distributable profits out of which to pay dividends to shareholders. The shareholders of Australian companies would clearly be disadvantaged economically by mandatory amortisation. The economic impact cannot be understated.

REQUIRED

Evaluate the above statement.