Recognition and Measurement of Assets in the International Accounting Harmonization. Impairment Test and Intangibles in a Dynamic Perspective
Comptabilite Controle Audit, Vol. 10, No. 2, pp. 55-72, November 2004
Posted: 10 Aug 2005
International Financial Reporting Standards (IFRS) provide intriguing and controversial issues for accounting theory. The article analyses rules for impairment test (IFRS 36) and intangibles (IFRS 38) from a theoretical viewpoint, renewing the old-fashioned distinction between static (market-based) and dynamic (process-based) accounting, that is fair value or accruals. It concludes that, concerned with non financial assets, the IASB rule for impairment is more closely related to accomodating "lower of cost or market value" than to advancing fair value revolution. Further developing that theoretical distinction, two different bases for the notion of asset are discussed, either as economic) actualisation of future cash inflows or as (accrual) capitalization of actual cash outflows. As consequence, accrual accounting is contrasted both with fair value and actualisation. Its informational content, indeed, may be complementary to financial market valuations, especially if equity interest calculation is provided on accrual basis.
Keywords: Accounting theory, international accounting harmonization, impairment of assets, intangibles, asset valuation recognition and measurement, dynamic accounting
JEL Classification: M41, K22
Suggested Citation: Suggested Citation