Intangible Assets - Agenda Proposal
Discussion of timetable for developing an Agenda Proposal
AASB staff participated in London and by video link from Melbourne.
The Board discussed the timetable for developing an Agenda Proposal for a joint IASB/FASB project to develop a new or revised accounting standard on intangible assets. The project is a Memorandum of Understanding item.
The Board agreed the proposed timetable, which envisages a Discussion Paper being issued in the third quarter 2009. However, many Board members expressed concern about the degree of detail in the papers submitted (and available on the IASB's Website), thinking it too much at this stage.
Concerns were expressed about the interaction of the intangibles project and other matters on the IASB's agenda, some of which should be regarded as precedential because they will equip the Board with the tools necessary to address the issues in the intangibles project. A Board member noted that one of the most important tools would be an agreed definition of an asset, as neither academics nor users nor standard-setters had yet agreed on a definition. Another would be to identify the appropriate measurement attribute. In addition, the project plan had to be realistic and identify who was going to undertake it and by when.
Board members noted that it in a recent meeting with users, some analysts had expressed concern about the recognition of internally-generated intangible assets. Those users were sceptical about the reliability of measurement of such items and suggested that disclosure of expenditure and the nature of the item might be a more useful substitute and enable analysts to value the asset.
The Board reconfirmed the scope of the project as examining the acquisition of intangible assets other than through a business combination (the latter are the subject of the revisions to IFRS 3 Business Combinations). 'Acquisition' included acquiring an intangible in an exchange transaction and through internal generation.
Another tension would be the dividing line between an intangible asset and a financial instrument, something that the IFRIC has had to address twice, in IFRIC 3 (since withdrawn) and IFRIC 12.
Assessment against IASB Agenda Criteria
The Board noted that the project met all the criteria for a Board Project. In pursuing the project, it would be important to involve the FASB staff at an early stage. The AASB staff expressed a desire to continue their involvement, although the lead staff would be IASB and FASB, as this was a MoU project.
The Board agreed that a Working Group would be useful. In addition, Board members suggested that staff meet with representatives of business sectors such as pharmaceuticals, telecommunications, film, computer software, etc, as these were sectors in which intangible assets arise most frequently.
The AASB staff will refine the Project Proposal with a view to reviewing it with the Trustees and SAC in the third and final quarters of 2007 such that the IASB can take a formal Agenda Decision in December 2007.