How to improve IFRS for intangible assets? A milestone approach

• DOI: 10.1016/j.cjar.2022.100289
• Publication Date: 2023-01-10T20:25:12Z
• Authors: Shefei Ma; Weiguo Zhang
• Keywords: Capitalization; Milestone; Relevance; Value (mathematics); Market capitalization

This study focuses on the decreasing relevance of financial information associated with current reporting standards for intangible assets. We summarize and compare three approaches to improving internally generated intangibles—the recognition approach, fair value approach disclosure among which we focus approach. investigate impact International Accounting Standard 38 R&D capitalization policies high-tech industry, particularly medical device firms in China. conclude that criteria are so stringent they disincentivize from capitalizing their investments. A large variation exists timing within industry. Accordingly, propose milestone revising suggest determining intangibles based cycle should be moved forward.