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Influence of Internally Generated Intangible Assets on Financial Statements Prepared in Accordance with IFRS

Author

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  • Libor Vašek
  • Marek Filinger

Abstract

This article looks at the very intricate and highly contentious issue of internally generated intangible assets as presented in the financial statements prepared under IFRS, with a special focus on research and development. In the first section, intangible assets are defined and then further classified as either purchased or internally generated; crucial distinction when choosing the right approach. The second section deals with research and development in a greater detail and provides not only a number of answers, but also raises several key questions, e.g. the question of objectivity and possible earnings management. Third section is devoted to measurement issues and in the last section, the reader finds excerpts from financial statements of different companies from various industries which illustrate the fact that some useful information is clearly missing. The conclusion suggest an easy, yet very efficien solution in tune with the ongoing convergence process between IFRS and U.S. GAAP, namely to move IAS 38 in the direction of U.S. GAAP and to forbid any capitalisation of development costs.

Suggested Citation

  • Libor Vašek & Marek Filinger, 2013. "Influence of Internally Generated Intangible Assets on Financial Statements Prepared in Accordance with IFRS," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2013(3), pages 10-23.
    • Handle: RePEc:prg:jnlefa:v:2013:y:2013:i:3:id:104
    DOI: 10.18267/j.efaj.104
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    References listed on IDEAS

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    1. Jan Molín, 2012. "Selected Consequences of Unlawful Conduct in Accounting in the Context of Current Legal Regulations of the Czech Republic [Vybrané důsledky protiprávního jednání v oblasti účetnictví v kontextu ned," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2012(2), pages 55-65.
    2. AfDB AfDB, . "Annual Report 2012 (Arabic Version)," Annual Report, African Development Bank, number 462.
    3. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
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    Cited by:

    1. Kimouche Bilal, 2022. "Intangible Assets, Goodwill and Earnings Management: Evidence from France and the Uk," Folia Oeconomica Stetinensia, Sciendo, vol. 22(1), pages 111-129, June.

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    More about this item

    Keywords

    Development; Financial reporting; IFRS; Research;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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