1. Intangible assets: its recognition, valuation and reporting
Neisse University
Matěj Štýbr, Pavel Služevský, Jonathan Quecke, Tomáš Košíček

2. Table of contents Definition of intangible assets
What are intangible assets? – examples
IFRS (International Financial Reporting Standards
Example of recognition and valuation for IFRS
Intangible assets under Czech accounting regulations
Valuation of intangible assets in Czech the accounting system§
Reporting of intangible assets in the Czech Republic
Intangible assets under German GAAP
Concessions, industrial and similar rights
Goodwill and payments to accounts
Conclusion

3. Definition of Intangible Assets
First of Assets - requires a past event that has given rise to a resource that the entity controls and from which future economic benefits are expected to flow
According to the International Accounting Standards Board intangible assets - an identifiable non-monetary asset without physical substance.

4. What are intangible assets?
Some examples:
patented technology
computer software
trademarks
internet domains
video and audio-visual material
customer and supplier relationships (including customer lists)
marketing rights

5. IFRS (International Financial Reporting Standards)
Recognizing Intangible Assets under the International Standards
must meet definition of intangible assets
is identifiable
either being separable
arising from contractual or other legal rights
Valuation of Intangible Assets
Intangible assets that meet the recognition criteria are measured by cost initially, and subsequently measured at cost or using the revaluation model, and amortised (unless it has an indefinite life, then it is not amortised)

6. IFRS (International Financial Reporting Standards)
Cost model : After initial recognition intangible assets should be carried at cost minus accumulated amortisation and losses due to impairment
Revaluation model : Intangible assets may be carried at a revalued amount (based on fair value) minus any subsequent amortisation and impairment losses only if fair value can be determined by reference to an active market.

7. Example of Recognition and Valuation for IFRS
Initial recognition: computer software
Purchased: capitalise Operating system for hardware: include in hardware cost Internally developed (whether for use or sale): charge to expense until technological feasibility, probable future benefits, intent and ability to use or sell the software, resources to complete the software, and ability to measure cost. Amortisation: over useful life, based on pattern of benefits (straight-line is the default).

8. Intangible assets under Czech accounting regulations
Czech legislation does not give a general definition of intangible assets. It only sets a list of items that can be recognized as intangible assets and those that can not be
Intangible assets include: Intangible results of research, software, valuation rights and goodwill. With the requirement that they have a useful life longer than one year and their valuation must be higher than the limit set by the accounting entity

9. Valuation of Intangible assets in the Czech accounting system
Intangible assets are valued at their acquisition price and the costs relating to their acquisition in case of purchase and own costs in case of creation by own activity.
Comparison approach
Is based on a principle of equality, which means that the competitive market of intangible assets is able to create equal prices with comparable usability and we use the market price

10. Valuation of Intangible assets in the Czech accounting system
Cost approach
Is based on a principle of economical substitution, which means that we are not willing to pay for an intangible asset more, than we would pay in economical costs to make an intangible asset with comparable usability
Income approach
Is the most commonly used principle and is based on the expectation that the interested person is not willing to pay more than is the expected income made from the use of an intangible asset

11. Reporting of Intangible assets in the Czech Republic
Long-term intangible assets are posted in the balance sheet in section B.I. – Long term intangible assets. In addition provided advance payments for finished and unfinished intangible assets are posted here too
Large, medium-size, small and micro accounting entities with a duty of verification of the financial statement by an auditor state the balance at the beginning and the end of the accounting period with the increase and decrease in the course of the accounting period in the notes for the individual entries
Information about adjusting entries at the beginning and end of the accounting period, including their increase or decrease in the course of the accounting period and the height of interests included in the valuation

12. Intangible Assets under German GAAP
The general definition in Germany for intangible assets is any fixed assets that is not tangible or financial
There are three types of recognized intangible assets:
Concessions, industrial and similar rights and licenses
Goodwill
Payments on Accounts

13. Intangible Assets under German GAAP
Recognized intangible assets with the exception of acquired goodwill have to be amortized
German GAAP does not allow for the revaluation of assets in excess of their original value

14. Concessions, industrial and similar rights
There are acquired identifiable intangible assets and internally generated identifiable intangible assets. Acquired identifiable intangible assets refer to the purchase of patents, trademarks, licenses, or customer lists etc. Internally generated identifiable intangible assets include legal fees, registration costs, and other expenditures directly related to securing rights such as patents or copyrights.
Internally developed and purchased software are capitalized and amortized over the entire lifespan

15. Goodwill and Payments to Accounts
Prohibition to recognize self created assists, meaning no self produced goodwill, so if not recognized must be expensed
Refer to the related costs on the acquisition of intangible assets, research and development expenditure, start up costs etc.
Own research and development is expensed as incurred

16. Conclusion
There are many similarities between the different accounting systems.
The IFRS system is the clearest with what to do with intangible assets.
The Czech and German ones are not that clear on what intangible assets are and how to report on them although through the harmonization processes it has become clearer

17. Thank you for attention!
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