ACCOUNTING

IAS 16 and IAS 38

IAS 16 and IAS 38

Introduction

The study is related to the internally generated intangible non-current assets under IAS 38 intangible assets and accounting treatment of self constructed tangible non-current assets under IAS 16 plant, equipment and property, which particularly focuses on their differences. It is believed that accounting for intangible assets that start in other ways warrant comparatively less concentration as compared to the accounting for internally created intangible non-current assets. The reason of this statement is that the treatments of intangible asset and tangible asset are in general constant where the assets rise in the similar way and thus does not raise to distinctive concerns in relation to the intangible assets.

Accounting Treatment of Self- Constructed Tangible Non-Current Assets under IAS 16 Plant, equipment and property

In relation to IAS 16 plant, equipment and property, for accounting treatment of self constructed tangible non-current assets under, it is important to consider the following given models as:

With reference to the initial recognition of acquired intangible assets obtained in a business merger or acquisition, the paragraph 18 of IAS 38 relates to the fair value. Thus, it is in accordance with the valuation based model.

Pertaining to the initial identification of intangible assets which are generated by the company activities, the paragraph 21- b of IAS 38 relates to the cost as initial recognition of internally created plant, equipment and property of IAS 16 does. For that reason, it is in accordance with the cost based model.

The IAS 16 plant, equipment and property establish accounting procedures for the fixed assets and equipment. The main aspects considered in the context of normative, are the recognition of assets, measurement, depreciation and losses impairment of these assets. The self constructed tangible non-current assets under IAS 16 introduce a set of definitions, in order to dispel doubts about the concepts employed (Mirza, Holt and Knorr, 2011).

IAS 16 Plant, equipment and property regulate the methods for accounting for tangible non-current assets, thus, tangible assets are allocated to the tangible non-current assets. Furthermore, there is in addition to the tangible assets intangible assets. These include development costs, various intellectual property assets, and the business and goodwill. Internally generated intangible asset is recognized on a condition that the intangible asset is pointed out by a discrete plan which is in accordance with the requirements of IAS 16 for the recognition of internally created plant, equipment and property (Gupta, 2004). On the other hand, the approach is possibly more useful in relation to tangible assets for the reason that assets do not have the propensity to materialize from unplanned activities, and when the tangible assets are obvious and hence not expensive to identify. For that reason, the key weakness of this approach is that it falls short to reflect the recognition of unplanned internally created intangible assets.

Internally Generated Intangible Non-Current Assets under IAS 38 Intangible Assets

An intangible asset is an identifiable non-monetary asset without physical substance in accordance with IAS 38, an asset is a ...