When the IASB set its initial agenda in 2001, the IASB decided to do no further work on a project on discounting (or present value). The project had begun under the IASB’s predecessor (the International Accounting Standards Committee, IASC). In this post, I: What are real options? Many people are familiar with financial options: explicit… Continue reading Real options and intangible assets
Tag: Right
Recognising revenue from sales-based royalties
One type of transaction within the scope of IFRS 15 Revenue from Contracts with Customers is licensing intellectual property to a customer in return for a royalty based on the licensee’s (future) sales. IFRS 15 sometimes requires the licensor to recognise its royalty as revenue before the licensee recognises its own related revenue. Also, estimating… Continue reading Recognising revenue from sales-based royalties
Deferred tax on intragroup inventory transfers
One case when IAS 12 Income Taxes requires companies to recognise a deferred tax asset is on unrealised intragroup profits on inventory. This arises when: Recognising this deferred tax asset is uncontroversial if the buying company and selling company are taxed at the same rate, but views are more mixed if rates differ. IAS 12… Continue reading Deferred tax on intragroup inventory transfers
We call too many things ‘intangible assets’
The definition of an intangible asset in IAS 38 Intangible Assets is too broad, in my view. The assets it captures do not form a single natural class of assets that all have a common feature. As a result, IAS 38 may not provide the most useful information about every type of asset captured by… Continue reading We call too many things ‘intangible assets’
The close link between rights and obligations
The Conceptual Framework for Financial Reporting defines an asset in a way that refers to a right.1 It defines a liability in a way that refers to an obligation. The two definitions are interlinked more deeply than a superficial reading may suggest. Because one definition relies on the concept of a right, it is no… Continue reading The close link between rights and obligations