Intangible Assets Essay

Financial Accounting Standards Board (FASB) in SFAC 6 Elements of Financial Statements separates asset by tangible and intangible assets. While tangibles are physical substance such as property, plant, and equipment, etc., intangibles asset are non - physical substance. Intangible Assets is defined by The IASC, in IAS 38 as a ``non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. An asset is a resource: (a) controlled by an enterprise as a result of past events; and (b) from which future economic benefits are expected to flow to the enterprise.'' Some popular intangible asset are known as brand names, trademarks, trade names, licenses,

- Data bases, enforceable contract, business agreements and licenses.

The next category is asset controlled by the firm yet do not have clear definition neither legal protection for ownership. Market for those intangible assets is likely very weak or unlikely to exist. R&D in process, reputational capital, business secrets, business processes and proprietary management are some examples.

The last category are those assets of which entities do have a few (if any) to none right to control. Market for such intangible assets do not even exist. Some identical example are relational assets, structural (or organizational) assets, etc.

By this way separation of Blair and Wallman (2000), basically intangible assets are distinguished by ownership (rights to control, to sell and to buy) and the existence of their market.

There is other way of classification which separate intangible assets into two categories: internally generated intangibles and externally acquired ones. By this kind of classification, external ones generally do not generate accounting problems as their price are defined by price of aim length transaction and decided by their market value. Inversely, intangible assets which are generated internally often lead to some serious accounting problem, such as measurement and

Some determinants can be listed in this paper are: auditor type, industry type, profitability and leverage.

Auditor type

An auditor is who officially and carefully consider and measure the accuracy of business record and financial statement (Oladipupo, 2005). An auditor could be internal, external auditor, or independent auditor in the public or private sector. An auditor is allow to work for different entities

Those entities which are audited by big four (KPMG, PwC, E&Y, Deloitte) are intensively and voluntarily disclose more intangible asset than those that are audited by none of those organization (Oliveira et al., 2006). Thus, it’s is supposed that bigger audit entities may force their clients to disclose more information in annual reports (Hossain et al.,1995) in order to prove their expertise and preserve their reputation
In conclusion, the relationship between auditor type and disclosure of firm’s intangible asset is positive. The bigger the audit firms, the more information and accuracy entities provide in their annual statement.

Industry