Research paper on definition of an asset

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

04 Feb 2010

The European Financial Reporting Advisory Group (EFRAG) and the Autorité des Normes Comptables (ANC, French accounting standard setter) have jointly published a staff research paper on the proposed new definition of an asset tentatively adopted by the IASB and FASB.

The paper – Pro-active Paper on the Definition of an Asset (PDF 336k) – is intended to serve as input to the IASB in its deliberation on the development of the Conceptual Framework Phase B.

Current definition of an asset in the IASB Framework: An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Proposed new definition: An asset of an entity is a present economic resource to which the entity has a right or other access that others do not have.

The paper tests a dozen arrangements against the two definitions: cash on hand, an account receivable, an assembled workforce, goodwill, a lottery ticket, an offer of future discounts to potential customers, know-how/knowledge acquired as a result of research expenditures, an improved position in the market/new customer relationship resulting from marketing efforts, contracts, a licence to operate in a restricted market, a deferred tax item for an unused tax loss, and a planned transaction. While the first six arrangements were also tested by the IASB/FASB staff, the last six arrangements were solely chosen and analysed by the EFRAG/ANC project staff.


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