Resource consents - intangible fixed assets? Yes, but, too difficult by far!
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Date
2000
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Abstract
Recent international attempts to draft an accounting standard (IAS38) which establishes the most
widely acceptable treatment for intangible assets have sparked debate among standard setters,
practising accountants and media analysts. Contentious issues include differing treatment for
internally and externally generated intangible fixed assets, and the requirement for the existence
of a ready market for the exchange of intangible assets.
A further question has been identified, that of whether the ‘right to do something’, as in
permission to act, is in itself an intangible asset and if so how should it be treated. An example of
this is resource consents issued under the Resource Management Act 1991. The aim of this
research was to investigate the nature of resource consents as intangible assets according to
ICANZ disclosure and recognition standards and to determine the level of disclosure
practised by companies listed on the New Zealand Stock Exchange.
Disclosure of resource consent details as non-financial information would provide a significant
proportion of the benefits involved in disclosing this class of asset while limiting the costs
involved in the production of the information. We conclude that the details of resource
consents held should be disclosed in the annual report as additional non-financial information,
or as a separate schedule of resource consents held in the notes to the financial statements
as per FRS1. This view is not addressed by the requirements of IAS38 or ED87 as this 'class
of intangible assets' is not discussed at all. However, it can be argued that the omission of
resource consents and other similar intangibles is contrary to the spirit of the true and fair
view requirement of the Financial Reporting Act and Generally Accepted Accounting
Principles (GAAP).
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Keywords
Intangible assets, Environmental auditing, Accounting standards