Advance Financial Accounting Negative and Social Consequences

Question: What Is the Accounting Negative and Social Consequences? Answer: Introduction Entities for expanding their asset structure are frequently incurring liabilities and expenditures. The asset structure in a company comprises of tangible assets and intangible assets. The essay focuses on Intangible assets. Intangible assets are controlled by AASB 138 (Halim Jaafar, 2012). Identification of negative and social consequences of AASB 138 The AASB 138 has some negative and social consequences in majorly public companies; the negative impact is in the form of nature, intensity and extent of the disclosure requirement of the intangibles. It has been observed that before the introduction of AASB 138, the management of the company requires disclosure of expenditures done for the assets such as research and development, exploration, goodwill, while in case of other than these intangible assets were not disclosed (Palmer, n.d.). Before AASB 138, intangible assets were controlled by AGAAP that is Australian generally accepted accounting principle (CPA Australia, 2011). After the introduction of AASB 138, the scope for the assets to be included in the category of intangible assets has been increased, due to which the disclosure requirement has also been increased (Hunter, Webster Wyatt, 2012). However s per AASB 138, an asset can be recognized as intangible only when if it is probable that the company would be able to earn future economic benefits from that particular assets (Marsden, 2010). Due to this, the cost of intangible assets would be recognized properly only when it is certain that the entity is sure that it would earn some economic benefits in future (AASB, 2015). Besides this, it has been observed that the assets which are generated by the efforts of internal management of the company would not be recognized as intangible assets (Henderson, Peirson, Herbohn Howieson, 2015). Here the internally generated intangible assets are mastheads, customer lists, self generated goodwill, and related assets (Dagwell, Wines Lambert, 2015). The social and economic consequence of AASB 138 is that: if any intangible assets are derecognized, it can lead to adversely affect the ratios such as debt-asset ratio (Finch, 2012). These factors are considered as negative consequences for the AASB 138 for the entity (ICAA, 2012). Conclusion It has been analyzed after doing a critical analysis over the AASB 138 that it is more restrictive in nature, the reason behind this is increase in the scope of intangible assets, due to which there would be increase in the cost of identification of assets and their respective disclosures. References AASB,. (2015) Intangible assets. Retrieved on 26th April, 2017 from https://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-15_COMPoct15_01-18.pdf CPA Australia,. (2011) IAS 38 Intangible assets fact sheet. Retrieved on 26th April, 2017 from https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/reporting/reporting-ifrsfactsheet-intangible-assets.pdf?la=en Dagwell, R. Wines, G Lambert, C,. (2015) Corporate accounting in Australia, Pearson higher education, Australia Finch, N,. (2012) Contemporary issues in Mining: leading practice in Australia, Palgrave Macmillan, United Kingdom Halim, H, A Jaafar, H,. (2012) Intangibles disclosure and capital raising in Australia: An analysis of information intensity, ASIAN Academy of management journal of accounting and finance, Vol 8(2), pp 69-91 Henderson, S. Peirson, G. Herbohn, K Howieson, B,. (2015) Issues in financial accounting, Pearson higher education, Australia Hunter, L. Webster, E Wyatt, A,. (2012) Accounting for expenditure on intangibles, ABACUS, Vol 48(1), pp 104-145 ICAA,. (2012) Chartered accountants financial reporting handbook 2012, Google eBook, John Wiley Sons, Australia Marsden, S, J,. (2010) Australian master bookkeepers guide [2009/10], CCH Australia limited, Australia Palmer, P, D,. (n.d.) The impact of adopting AIFRS in Australia: the extent and quality of disclosures, and their relationship to corporate characteristics. Retrieved on 26th April, 2017 from https://www.flinders.edu.au/sabs/business/research/papers/06-5.pdf