New Guidance on Accounting and Financial Reporting for Intangible Assets

Rizvana Zameeruddin considers new guidance on accounting and financial reporting for intangible assets from the Government Accounting Standards Board (GASB) in the USA. Zameeruddin considers that when Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results. This should improve financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles.

Abstract
Before the issuance of Statement 51, the question of where public sector accountants in the US should look for guidance about reporting and accounting for intangible assets was unclear. An intangible asset was most likely accounted for under Statement 34, which defines an intangible asset as a capital asset; together with Accounting Principles Board Opinion (APB) No. 17, Intangible Assets, and Financial Accounting Standards Board (FASB) Statement No. 142, Goodwill and Other Intangible Assets. Some of the questions existing guidance raised were: should easement rights be reported, should assets donated to the government be reported differently from assets purchased, how should water rights be reported, how should internally created intangibles be valued, which intangibles, if any, should be amortized? After conferring with FASB, the International Accounting Standards Board (IASB), the American Institute of Certified Public Accountants (AICPA), and the International Public Sector Accounting Standards Boards GASB issued Statement 51 to
clarify existing guidance. When Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results can be made. This ultimately improves financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles.

Zameeruddin GASB 51 New Guidance on Accounting and Financial Reporting for Intangible Assets