Accounting for expenditure on intangibles

Hunter, Laurie, Webster, Elizabeth and Wyatt, Anne (2012) Accounting for expenditure on intangibles. Abacus, 48 1: 104-145. doi:10.1111/j.1467-6281.2012.00359.x

Author Hunter, Laurie
Webster, Elizabeth
Wyatt, Anne
Title Accounting for expenditure on intangibles
Journal name Abacus   Check publisher's open access policy
ISSN 0001-3072
Publication date 2012-03
Sub-type Article (original research)
DOI 10.1111/j.1467-6281.2012.00359.x
Volume 48
Issue 1
Start page 104
End page 145
Total pages 42
Place of publication Richmond, Australia
Publisher Wiley-Blackwell Publishing Asia
Collection year 2013
Language eng
Formatted abstract
In search of a unifying measurement feature on which to base a more systematic and potentially comprehensive analysis of intangibles, this paper first analyses the economic and accounting properties of intangibles, and second, empirically evaluates managerial practices for measuring and analysing expenditure on intangibles. We present evidence from a survey of 614 large Australian firms that suggests gaps in the extent with which firms plan, monitor, record, analyse, and report on intangibles. Third, we evaluate the implications of our analysis and survey for accounting practice. Our evidence suggests GAAP has a role to provide guidance that helps firms identify and classify their expenditure on intangibles in ways that elucidate the strategic implications of the different types of intangibles for future output. A secondary step for accountants, after identifying and classifying the expenditure on intangibles, is to apply a capitalization test to distinguish expenses from assets. The current asymmetric treatment of expenditure on purchased versus internally generated intangibles is not supportable on economic grounds. However, economists identify weak property rights as a major cause of uncertainty associated with the outcomes from expenditure on intangibles, suggesting verifiable property rights is a unifying measurement feature on which to base a capitalization test for intangible assets.
Keyword Accounting
Rate of return
Expenditure on intangibles
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2013 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 5 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 8 times in Scopus Article | Citations
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Created: Wed, 04 Apr 2012, 11:48:46 EST by Karen Morgan on behalf of UQ Business School