Intangible Assets and Creative Impairment - An Analysis of Current Disclosure Practices By Top Australian Firms

Abstract

This paper examines the disclosure of intangible assets by 'high user' industrial firms in the Australian market subsequent to the introduction in 2005 of AASB 136 and AASB 138. Using a sample of ten large industrial firms with combined intangible assets of $37,758 million as at 2006, the paper analyses the disclosure of goodwill and 18 other distinct intangible assets classes of these firms, and examines their implied effective life by probing the impairment expense detailed in the profit and loss statement. The paper identifies that there is a high degree of uniformity in disclosure practices by the sample firms, and raises the question that a key motivating factor in determining impairment of intangible assets under a new regulatory regime might be the temptation for creative accounting.