GOODWILL CASE
Despite the fact that, a business venture may claim to own numerous intangible assets, not all of its intangible assets qualify to appear on the balance sheet. Intangible assets will only appear on the balance sheet based on the following criteria of restrictions; intangible assets will qualify to appear on the balance sheet only if; the business venture acquired the assets i.e. if the intangible assets are not developed within the business enterprise. Also intangible assets can only appear on the balance sheet if they can be identified in terms of value and have a useful timeline and therefore amortizable. An example of intangible assets that appear on the balance sheet is goodwill. US GAAP has key criteria that provide the guidelines to be used to determine whether an intangible asset is included in the balance sheet or not. US GAAP criteria include; whether the intangible asset exists under separate identity from any other aspect of the business venture. Another criteria as offered by the US GAAP is that an intangible asset will be recognized in the balance sheet based on the aspect of ownership i.e. whether the use of the intangible asset in question is owned or controlled by the business venture as an outcome of its past engagements and proceedings. An intangible asset will be or will not be recognized in the balance sheet based on whether there is any economic benefits that can be generated from it in the future by the business venture. US GAAP also recognizes intangible assets based on cost of the asset i.e. whether the cost of the intangible asset can be established in a reliable, measurable and identifiable manner (Goodwill and Other Intangible Assets 23).
The important difference when accounting for the intangible assets between the IFRS and GAAP standards is that under IFRS, some certain development costs are capitalized. Under US GAAP, the development costs are usually expensed, apart from under some certain circumstances when accounting for a business acquisition. In the course of normal business, under US GAAP, the development costs are not capitalized, but they can be capitalized under IFRS. Although the research costs are expensed under GAAP and IFRS standards, IFRS does specify on what costs that cannot be capitalized. IFRS identifies these costs to include the internally created images, internally generated goodwill as well as the employees training costs. The internal websites can also be capitalized under IFRS only under certain conditions can it be capitalized under the US GAAP (Neuhausen 41).
In my own opinion, IFRS provides more relevant disclosures on the internally-developed intangibles relative to the U.S GAAP. Under the U.S GAAP some relevant information is expensed and this tends to withhold very valuable information from the various stakeholders of the many US financial statements stakeholders. In my own opinion I also find IFRS accounting standard to be more reliable (Hirschey et al. 32).
PALFINGER
Speculation:
An impairment loss is identified and accrued through a particular journal entry in order record and reevaluate the asset’s value. Therefore, if Palfinger had not previously recorded impairment on the building, then Palfinger would have lost significant value equivalent to the same impairment loss valuated at TEUR 1,960.
New Journal Due to Palfinger not previously recording Impairment:
Works Cited
Goodwill and Other Intangible Assets. Norwalk, Conn: Financial Accounting Standards Board of the Financial Accounting Foundation, 2001. Print.
Hirschey, Mark. Tech Stock Valuation: Investor Psychology and Economic Analysis. Amsterdam: Academic Press, 2003. Internet resource.
Neuhausen, Benjamin S, Rosemary Schlank, and Ronald G. Pippin. 2008 Cch Accounting for Business Combinations, Goodwill, and Other Intangible Assets: Interpretations of U.s. and International Accounting Standards. Chicago, IL: CCH, 2007. Print.
