THE JUST EVALUATION OF NON-CURRENT INTANGIBLE
ASSETS FOR FINANCIAL REPORTING
Breban Ludovica
Universitatea de Vest Vasile Goldis Arad, B-dul M.Viteazu, nr. 57,bl.T2, sc.C, ap.13, Municipiul Zalau, jud. Salaj, e-mail: , tel: 0723302136
Bochis Leonica
CECCAR-Filiala Bihor, e-mail:
Sucala Lucia
Universitatea “Babes-Bolyai” Cluj-Napoca, e-mail:
Dumbrava Partenie
Universitatea “Babes-Bolyai” Cluj-Napoca, e-mail:dumbrava@
ABSTRACT: Enterpris frequently expend resources, or incur liabilities, on the acquisition, development, maintenance or enhancement of intangible resources such as, scientific or technical knowledge, design and implementation of new process or systems, licences, intellectual property, market knowledge and trade-works (including brand names and publishing titles). Examples of items encompasd software, patents, copyrights motion picture films, customer lists, fishing licence import quotas franchis customer or supplier relationship, customer loyalty market shore and marketing rights.
Keywords: financial reporting, intangible asts, just value
Introduction
For financial reporting at the just value of the non-current intangible asts and not only, an important role is held by the economic information which is esntial for the decision making of the urs of financial information (managers, investors, creditors etc.) . It can be said that the market for accounting information has an increasingly international quality becau its urs are more and more pretentious, and for the accounting profession this is a challenge.
The just value is a highly debated concept, being a conquence of a principle: true and fair value. N
o one has interpreted the just value as the faithful value, being translated into different languages as: just (juste) in French; real (reele) in Dutch; the value attributable (beizulengender zeitmert) in German; fair value without any translation in Italian.
According to the International Standards of Financial Reporting the just value is defined as being ”the sum at which an ast can be transacted or a liability can be discounted,
willingly, between parts acquainted with the subject, in a transaction where the price is determined objectively” 1.
The just value contains the market value and is prone to cover all the values born out of the estimations bad on economic calculations. It is oppod to the principle of prudence and of evaluation at the historic cost. The just value prents a ries of qualities such as: comparability, restricted complexity and neutrality.
When there is not sufficient market information at the evaluation data as a result of the nonexistence of an active market, instead of the market value, for the asts outside exploitation a net replacement cost will be determined (NRC). For the estimation of the just value we consider we will be needing the aid of some informational sources such as:
a)IAS 38 – current intangible asts (Active necorporale);
b)IFRS 3 – entities’ combination (Combinări de întreprinderi);
c)IAS 36 – depreciation of asts (Deprecierea activelor);
d)European Directives – in what measure the just value is accounted for;
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e)IVS (International Valuation Standards) treatments recommended for the evaluation destined
for financial reporting, especially GN 4-Evaluation of intangible asts.
The accounting treatment and the manner in which the financial information regarding non
current intangible asts is prented are included in IAS 38 …Intangible asts”. A non-current intangible ast is defined as a non-monetary non-current ast without material substance.
According to IAS ”Intangible asts”, a non-current ast fulfills the criteria of identification from the definition of a non-current intangible ast when …it is parated, that is it can be parated or divid
ed by the entity and sold, transferred, authorized, rented or exchanged, either individually or together with a contract , an ast or a correspondent liability; or it comes from contractual rights or of any other legal provenience, no matter if tho rights are transferable or parable from the entity or from other rights or obligations”[1].
Evaluation of intangible asts
Economic entities frequently invest in resources or attract liabilities for the acquisition, development , maintenance or extinction of intangible resources such as scientific or technical knowledge, designing and implementing new technologies, licens, intellectual property, software, patents, copyright, trademarks. But not all the elements previously enumerated satisfy the definition of a non-current intangible ast, respectively the recognizable qualities, the control over a resource and the existence of future benefits. If an element from an applicability area of this standard does not comply to the definition of the non-current intangible ast, then the expen for obtaining or internally generating it is recognid as cost in the moment of its occurence. If that certain element is obtained through a combination of entities, it reprents a part of the commercial fund recognid at the date of the acquisition.
As about the recognition of the current intangible asts - it is made only when certain recognition criteria are fulfilled:
−they are likely to generate future economic benefit
−the cost of the current ast can be credibly evaluated.
Starting with the cond financial exerci, current intangible asts can be evaluated parately in order to be recognid in financial situations prenting a ries of particularities such as:
1.Determining the total value of the current intangible asts – residual extent
2.Determining the report between the value of the invested capital (VIC) and that of the
invested net cash-flow (INCF)
3.The order of the evaluation of parate current intangible asts
4.The addition of the fiscal benefit resulting from the amortisation of parate current intangible
asts
5.Other particularities
6.Recognid methods of evaluation
The fixing of the current intangible asts’ residual extent’s total value, typical of the acquisitions of entities, is made through the following ries of calculus:
To the price paid for the acquisition of all current asts plus the overtaken short-term debts, we add the overtaken long-term loans and thus obtain the corrected acquisition price. Out of this price we substract the just value of all current asts found in the balance (except for that of current intangible asts), thus obtaining the total value of current intangible asts.
The evaluation of parate current intangible asts is made in a certain order, and the main criterium is the credibility degree of the evaluation hypothesis:
1.Computer programmes
2.Internally applied intervention patents
3.Products’ marks
4.Instructed labour force
5.Licens
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6.Unpatented technology
7.Unfinished rearch-development projects
8.Commercial fund
The evaluation of current intangible asts is made at their just value which, according to IFRS 2007, is a concept similar with that of market value. An intangible element, reported as a current expenditure, cannot be later on recognid as a part of a current intangible ast’s cost. Following expenditures, performed with a current intangible ast, will increa the cost of that current intangible ast only when tho expenditures allow the current intangible ast to generate future economic benefits that surpass the initially predicted performance and if they can be credibly evaluated. We must mention that t-up costs, professional development costs, publicity and promotion costs, moving or activity reorganising costs and internally generated commercial funds ar
e not admitted as parate current intangible asts.
IFRS insists that, in ca of entity combination, the owner should recogni as many parate current intangible asts as possible so as to ensure a more preci reflection of the entities’ patrimony. Experts should especially pay attention to the current intangible ast called “instructed labour force”which cannot be admitted as a parate current intangible ast yet it is parately evaluated so as to ensure the accuracy of the evaluation techniques of the other parate current intangible asts. The explanation is that, due to the entities’ incapacity of controlling the benefits brought about by such a current intangible ast, the value of the instructed labour force is included in the commercial fund when transpod in the accounting balance.
Identifiable current intangible asts, bought as a part of entities’ combination, is registered at the just value of the acquisition date provided it fulfills the recognition criteria. The most credible estimation of a current intangible ast’s just value is the acquisition price of other similar or identical current intangible asts from an active market. IAS 38 also mentions the possibility of estimating the current intangible asts’ just value , current intangible asts that were obtained as a result of entities’ combination, through indirect estimation techniques, which consist of
a)either some multiplying coefficients ud on some forms of income
b)either the u of net due economic actualisation method
c)either the actualisation of the following net cash-flow that might be generated by a current
intangible ast.
As about the evaluation methods ud for the current intangible asts, they prent a ries of particularities, such as:
萝卜汤的功效与作用−In ca the current intangible ast is evaluated with respect to its costs (for instance a computer programme), we must take into account the amount we save when the profit tax is
levied (fiscal benefit)
−When two or three landings to value are ud, the result is that obtained from the most credible landing, without making the arithmetical mean.
−If two procedures of the same evaluation method are ud and we obtain two different but clo values, we may suggest as a final value the arithmetical mean of the two results −The result that relies on information collected directly from the market is always the most credible one.
The landings in the evaluation of current intangible asts are:
a)Landing through sales’ comparison
b)Landing through income
c)Landing through cost.
国家英语怎么说Landing through sales’ comparison
The determination of a current intangible ast’s just / market value through this approach refers to: −transaction prices of identical or similar current intangible asts, or
−through “evaluation multiples” implied in the transaction price of identical or similar current intangible asts.
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An “evaluation multiple” is a multiplying coefficient computed as a report between the transaction price of a current intangible ast and a financial indicator such as the business figure generated by
祝贺the current intangible ast, the profit generated by the current intangible ast after the deduction of the expenditures related to the u of the current intangible ast. The indicators may be from this year, the previous or the following one. The evaluation multiple is then applied to the financial indicator of the evaluated current intangible ast.
The market current intangible asts are transacted on may be:
1. an extremely small active market [2]; in IAS 38, fishing and cab licens are called non-current intangible asts. In this particular ca, when current intangible asts are identical, their transaction prices may be adjusted only so as to reflect the type of transaction and the shifting of prices between the moment of the identical current intangible asts’ transaction and that of the evaluation of the current intangible asts.
2. an inactive market on which similar current intangible asts are transacted. In this ca either transaction price or evaluation multiples’ adjustments are required.
As a result of the reduced number of transactions with current intangible asts on an inactive market, the adjustments of the similar current intangible asts’ prices or multiples is extremely hard to justify and as a result the tting of the just/market values through this landing is quite rare. We no
tice the IAR 38’s firm position, stating that the current intangible asts’ reevaluation is only allowed for tho which appear on an active market.
Landing through income
The value of a current intangible ast using this landing equals the updated value of the profit, of the cash-flow or of the savings that could be obtained by the participants in the market, owners of the current intangible asts. The income flow that may be attributed to a current intangible ast could come from veral sources, from all the owner of the entity’s activity areas.
There are three methods ud for the landing through income of a current intangible ast:
a)Economy method / due exemption method – primary method ud for the evaluation of
products’ marks, invention patents, franchis, licens and technical documentations. Its
credibility degree is high as it relies on due rates found on the market for similar current
手机通讯录怎么恢复intangible asts.
b)Supplementary profit method (economic profit) – consists of the estimation and update or
capitalization of the profit or of the supplementary cash-flow that may be obtained by the
美丽的乡村participants in the market that u a current intangible ast, besides tho obtainable without
the u of that current intangible ast.
c)Net profit method / exceeding periodical net cash-flow method is constructed on the
南越王宫prevision of the net cash-flow from that entity’s exploitation who us a current intangible
ast, out of which we substract the cash-flow allocated to ensuring the profitableness
demanded by the other current asts that contribute to generating the entity’s net total cash-
flow.
Landing through replacement cost
The esnce of this landing consists of determining the cost of an identical or potentially similar current intangible ast: either by identifying the replacement price of an identical or similar current intangible ast, or by determining the internal generation cost of a similar or identical current ast.
The evaluated current intangible ast needs to be transactionable at a price that is equal with its replacement cost in order for the result of this method to reflect the just/market value. The landing through net replacement cost is the only method registered through landing through cost just as the International Standard of Evaluation GH8 demands (the net replacement cost for financial reporting).
Landing through cost has greatest relevance for the evaluation of:
−instructed labour force
−computer programmes
−distribution system
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However, veral prestigious authors also sustain the possibility of applying the cost landing for the evaluation of other current intangible asts such as marks, invention patents, technological documents.
In order to highlight the relevance of this approach we propo a ca study regarding a parately acquired invention patent.
Ca study
An economical entity has bought from a foreign invention patent owner a patent for a procedure, for 200,000 Euro. The ller made a discount of 5% of the lling price of the invention patent. Customs duties ri to 20,000 Euro. You are asked to determine the cost at which the patent will be accounted in the initial accounting balance.
游玩的近义词Solution: the cost of the patent = 200,000 – (5%*200,000) + 20,000 + 5,000 = 165,000 Euro, and this value will be initially written in the balance.
The values determined from the just evaluation are economical values found through experti and diagnostic by professionals in the field.
The dependency between the stock exchange and the reevaluation rerves has been proven to take place by studies performed in the domain of evaluation through tests baring statistical significance on efficient markets. This dependency appears as a result of the u of the just value for the reevaluation of non-current asts.
The quality of the accounting information depends on the way the just value is estimated through the
credibility and neutrality criteria. Professional experts have a significant role in the process of estimation of the just value, when evaluating the current asts. One of the requirements of some uful rvices is the proper knowledge and interpretation of the International Evaluation Standards (IVS), and of tho of accounting (IFRS), as well as national accounting norms.
李白写杨贵妃的诗句References
1.[1] IAS 38 – “Non-current Intangible Asts”, (Imobilizări necorporale), CECCAR Printing
Hou, Bucharest, 2001; IFRS , CECCAR Printing Hou, Bucharest, 2007
2.[2] An active market is a market that fulfills three conditions:
a)homogonous transaction elements
b)the permanent existence on the market of a considerable number of interested buyers and
llers
c)the availability of prices to the public.
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