Question

Question: Briefly discuss the convergence efforts that are underway in the area of intangible assets.

Short answer

Answer

The IASB and FASB had previously identified a project, in a very preliminary stage, which would consider expanded recognition of internally generated intangible assets.

Step-by-step solution

Meaning of Intangible Asset

Intangible assets are assets that do not have a physical form. Organizations that have spent a significant amount of money to establish brands may find that the value of their intangible assets much outweighs the worth of their physical assets. A large number of physical resources, such as buildings, land, and machinery, are frequently present in an organization.

Explaining the convergence efforts that are underway in the area of intangible assets

The International Accounting Standards Board and the Financial Accounting Standards Board have come up with a proposal for accounting for development and research, which might bring together numerous accounting standard bodies on the subject.

The most likely scenario is that the US GAAP would be amended to enable capitalization of in-process research and development, which is already authorized under Indian GAAP.

Another difference between the Indian GAAP and the US GAAP is that the Indian GAAP allows for higher recognition of intangibles. As a result, developing converging standards for intangible assets will be both tough and exciting.