INTHEBLACK March 2025 - Magazine - Page 19
Under current accounting
rules, companies are unable
to recognise certain internally
generated intangible assets
such as brands and intellectual
property in their accounts.
Technological advancements
have resulted in many
companies having significant
value locked into intangibles,
which effectively have no
financial value reflected in
their accounts.
Moves are afoot to change
the rules that were introduced
in 2001 — before the launch
of the first Apple iPhone — but
it is likely to be a long process.
Brand
new day
With companies around the world holding trillions of dollars in intangible
assets off their balance sheets, is it time to change the accounting rules
governing them? The International Accounting Standards Board (IASB)
is conducting research to get to the bottom of it.
Words Gary Anders
WITH A SHARE MARKET
capitalisation of more than A$5 trillion,
Apple Inc. has been at the cutting edge
of technology development for decades.
Its recently launched iPhone 16, for
example, has incorporated artificial
intelligence (AI) software, marketed as
“Apple Intelligence”, that it says draws on
personal context to “help you write, express
yourself and get things done effortlessly”.
This world-leading technology has
the potential to generate billions of dollars
in revenue and profit for Apple — but the
true value of Apple’s AI won't be on the
company’s balance sheet.
While some of the cost of Apple’s
AI will be listed among the company’s
assets, there would be minimal value,
if any, for Apple’s brands, its software,
designs, symbols, digital copyrights,
trademarks, licences, customer lists or its
other intellectual properties. These are all
internally generated intangible assets,
and they simply don’t count.
Under the international accounting
standard IAS 38 Intangible Assets,
very few internally generated intangible
assets may be recognised in financial
statements. That’s largely because, from
an accounting perspective, there’s no rigid,
intheblack.cpaaustralia.com.au 19
