Essay topic: The effect of the introduction of AASB138 on the quality of accounting for intangible assets

A number of articles have investigated whether the adoption of IFRS in Australia has improved the accounting for intangible assets. The relevant Australian standard on Intangible Assets consistent with IFRS is AASB138. For example, Finch (2006) discusses both AASB138 and another relevant standard, AASB136 Impairment of Assets, and studies the impairment expense relative to total intangible assets of a sample of large Australian firms. He states that these firms "may be engaged in creative accounting ... which is increasing both profits and the book values of intangible assets in the short term". The author of this study appears to be implying that the introduction of IFRS has had a definite effect of the quality of reported intangible assets.

An essay in response to the essay question provided below. Required to discuss whether the disclosure of Intangible Assets under AASB 138 together with Impairment of assets (AASB 136) can provide the avenue for creative accounting practices as suggested by Finch (2006)

Your discussion should include, but not limited to:

i) Identification and a brief description of the main issues.

ii) Past and current issues need to be discuss critically. Discussion should cover among other things, the definition, initial recognition, initial measurement and subsequent measurement of intangible assets.