The Classification and Treatment of Intangible Assets Has Varied Over Time under a Number of Accounting StandardsAccounting for intangibles has been the subject of a long debate among scholars and practitioners. For accounting, the principal problem arising from the intangible elements is that of their capitalisation as intangible assets, i.e. as an integral part of the balance sheet and therefore subject to amortisation. The share taken by intangibles in industrial companies, but also in services - take for example software firms, or companies leading in research on contract - poses necessarily important problems for an evaluation of these companies, and, in fine, of the measurement of their performance and that of their company heads.
Depending on the use of one method or another, more or less open to the capitalisation of specific components of intangibles, the accounting and financial configuration of a given company might change. This point is all the more worthy of note as there exists a multitude of different methods and practices at the international level, with regard to the capitalisation of intangibles. The stakes here are threefold: • There is a need to integrate the various dimensions of the value of the company.
• There is a need to standardise for accounting practices and rules. • There is a need to inform external stakeholders, such as financial analysts and potential partners and investors (e. g. pension funds) on the real value of companies, especially those with high intensive-knowledge. The assets recorded in the balance sheets are economic assets. Economic assets are entities functioning as a store of value over which ownership rights are enforced by institutional units, individually or collectively, and from which economic benefits may be derived by their owners by holding them or using them over a period of time.
The economic benefits consist of primary incomes (operating surplus by using, property income by letting others use) derived from the use of asset and value, including possible holding gains/losses that could be realised by disposing of the asset or terminating it. Excluded from the asset boundary are: • human capital; • natural assets that are not economic assets (e. g. air, river water); • contingent assets, which are not financial assets.
Three categories of assets are distinguished: 1 non-financial produced assets; 2 non-financial non-produced assets; 3 financial assets. Non-financial produced assets Produced assets (AN. 1) are non-financial assets that have come into existence as outputs from production processes. The classification of produced assets is designed to distinguish among assets on the basis of their role in production. It consists of: • fixed assets which are used repeatedly or continuously in production for more than one year; • inventories which are used up in production as intermediate consumption, sold or otherwise disposed of; • and valuables.
The latter are not used primarily for production or consumption, but are acquired and held primarily as stores of value. Non-financial non-produced assets (AN. 2)Non-produced assets (AN. 2) are economic assets that come into existence other than through processes of production. They consist of tangible assets and intangible assets as defined below.