Accounting for Intangible Assets: Suggested Solutions

Abstract

Columbia Business School established the Center for Excellence in Accounting and Security Analysis in 2003 under the direction of Trevor Harris and Professor Stephen Penman. The Center ("CEASA") aims to be a leading voice for independent, practical solutions for financial reporting and security analysis, promoting financial reporting that reflects economic reality and encourages investment practices that communicate sound valuations. CEASA's mission is to develop workable solutions to issues in financial reporting and accounting policy; produce a core set of principles for equity analysis; collect and synthesize best thinking and best practices; disseminate ideas to regulators, analysts, investors, accountants and management; and promote sound research on relevant issues. Drawing on the wisdom of leading experts in academia, industry and government, the Center produces sound research and identifies best practices on relevant issues. CEASA's guiding criterion is to serve the public interest by supporting the integrity of financial reporting and the efficiency of capital markets. Located in a leading university with a mandate for independent research, CEASA is positioned to lead a discussion of issues, with an emphasis on sound conceptual thinking and without obstacles of constituency positions. More information and access to current research is available on our website at http://www.gsb.columbia.edu/ceasa The Center is supported by our generous sponsors: General Electric, IBM and Morgan Stanley. We gratefully acknowledge the support of these organizations that recognize the need for this center.

Recognition and Evaluation of Data as Intangible Assets

“…A further requirement for recognizing intangible assets is that their cost can be reliably estimated (Barker et al, 2021). Considering data as intangible assets, the associated costs involve data collection, cleaning, analysis, etc.…”

“…To determine if data constitutes intangible assets, it is necessary to review the various accounting standards (Barker et al, 2021). This paper argues that CAS, IFRS, and U.S. GAAP constitute the three major accounting standards in the world since China and the U.S. are the top two economic entities globally, and IFRS has been widely adopted in many European and other countries.…”

The Beautiful Game: Fair Value, Accountability and Accounting for Player Registrations

“…This results in the costs of investing in intangible assets being mismatched with current revenues, reducing the usefulness of the income statement and balance sheet (Barker et al. 2021).…”

“…This results in clubs with a development strategy frequently presenting with weak balance sheets while those that purchase players appear to be in stronger financial positions because their player contracts are capitalised (see also Morrow 1996; Morrow 1997; Lev 2018b; Barker et al. 2021).…”

“…The effect is a distorted profit measure (see Dichev and Tang 2008; Lozano and Gallego 2011; Lev 2018b; Barker et al. 2021). There is also no current measure of the total value of contract assets under the club's direction which would be essential for gauging the income being earned in each reporting period and comparing it with base performance measures such as the risk‐free rate of return on assets with similar terms.…”