ABSTRACT
This project is a comprehensive study and examines the “Accounting
treatment of intangible assets the way out, (A case study of Guinness Nigeria
Plc Sapele branch Delta state. This project is aimed at determining the impact
of the current accounting range of thinking relative to intangible assets and
how such resources should be valued, recognized and presented in the financial
Reporting of companies. Data were collected through primary and secondary
sources. The finding revealed that the impact of goodwill as intangible assets
plays vital role on the organization adequate skilled personnel in measuring
and evaluating accounting for intangible assets. Therefore, the impact of
accounting for intangible assets cannot be over emphasized hence it depends on
the conferment of a given organizational setting. Form the conclusion of the
study: it can be observed that there will be serious potentials for misunderstanding
and suspicious resulting from information based on mix of conflicting
accounting policies. It is therefore recommended that policy maker should
promote education business training initiative with a view to building broad capacities
in intangible management.
TABLE OF
CONTENTS
Tile
page
Approval
page …………………………………………………………………...i
Dedication
…………………………………………………….………………...ii
Acknowledgment…………………………………………………….…………iii
Abstract………………………………………………….……………………...iv
Table
of content …………………………………………………………...……v
CHAPTER ONE
1.0 Introduction ………………………………………………………………1
1.1
Background of the
study…………………………………………….……1
1.2
Statement of the
problem…………………………………………...…….4
1.3
Objective of the study…………………………………………………....6
1.4
Significant of the
study………………………………………………...…6
1.5
Research questions……………………………………………………..…6
1.6
Research
Hypothesis……………………………………………………...7
1.7
Scope /
Delimitation of the study……………………………..…………8
1.8
Definition of
terms ………………………………………………….……8
CHAPTER TWO
2.0 Literature Review……………………………………………….………10
2.1 Theoretical framework of the study……………………..………………10
2.2 Current literature review………………………………………….……16
2.3 Models and theories relevant to the
Research question ……21
2.4 Summary of the literature ………………………………………………21
CHAPTER THREE
3.0 Research Methodology………………………………………….………24
3.1 Design of the study……………………………………..……….………24
3.2 Area of the study………………………………………………...………24
3.3 Population of the study………………………………………….………24
3.4 Sample and sampling techniques ……………………….………………25
3.5 Instrument for data collection …………………………………..………25
3.6 Validity of the
instrument …………………………….…………….…25
3.7 Distribution and Retrieval of the
instrument ……………...……………26
3.8 Instrument for Data Analysis ……………………...……………………26
CHAPTER
FOUR
4.0 Data presentation and Analysis…………………………………………28
4.1 Data presentation and interpretations ………………..…………………28
4.2 Finding …………………………………………………………….……35
CHAPTER FIVE
5.1 Summary of
findings, conclusion, Limitation and Recommendation….40
5.2 Conclusion ………………………...……………………………………41
5.3 Recommendation ………………………...………………………..……41
5.4 Limitation for the study ………………………...………………………42
5.5 Suggestion for further studies ………………………....………………..43
References ………………………...……………………………...……..44
Appendix A………………………...…………………………...………45
Appendix B………………………...………………………………..…46
Questionnaire
………………………...…………………………………47
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Accounting for intangible asset has gained prominence
in the past few decades due to changes in the way the business world operates.
Intangible assets are either acquired in
a business combination on developed
internally. In case of acquisition in a business combination such assets are
recorded at their air value, while in case of internally generated intangible
assets the assets are recognized at the cost incurred in development phrase. In
relation to the development of internally generated intangible assets there are
two phrases research phases and development phase. Research phase includes all
activities and cost incurred before the intangible assets is commercially
feasible, while the development phase include all activities and costs incurred
after the asset is established to be commercially feasible. All costs in
research phase are expensed in the period incurred while costs incurred in
development phase are capitalized. Intangible assets are typically expensed
according to their respective life expectancy. Intangible assets have either an
identifiable or indefinite useful life. Intangible assets with identifiable
useful lives are amortized on a straight line basis over their economic or
legal life, which ever is shorter. Examples
of intangible assets with identifiable useful like include copyrights
and patents intangible assets with indefinite useful lives are reassessed each
year for impairment. If an impairment has occurred, then a loss in determined
by subtracting the assets fair value from the asset’s book / carrying value.
Trademarks and goodwill are examples of intangible assets with indefinite
useful lives. Goodwill has to be tested for impairment rather than amortized if
impaired, goodwill is reduced and loss is recognized in income statement.
According to International Accounting standards Board
Standard 38 (IAS 38) defines an intangible asset as: “an identifiable
non-monetary asset without physical substance. This definition is in addition
to the standard definition of an asset which requires a past event that has
given rise to resource that the entity controls and from which future economic
benefits an expected to flow. Thus, the extra requirement for an intangible
asset under IAS 38 is identifiable. This criterion refines that an intangible
asset is separable from the entity or that it arises from a contractual or
right.
According
to financial accounting standards Board (FASB) Accounting standard codification
350 (ASC 350) defines a intangible asset as an asset, other than financial
asset that lacks physical substance. The lack f physical would therefore seen
to be a define characteristic of an intangible asset. Both the (IASB) and
(FASB) definition specifically preclude monetary assets in their definition of
in intangible asset. This is necessary in or to avoid the classification of
items such as accounts receivable, derivatives and cash in the bank as an
intangible assets, including: computer, software, copyright and patents.
The
international Accounting standards Board (IASB) of some guidance (IAS38) as to
how intangible assets should be accounted for in financial statements. In legal
intangibles that are developed internally are not recognized and legal
intangibles that are purchased from third parties are recognized. Wordings are
similar to under generally accepted accounting principles (GAAP), intangible
asset after their initial recognition is not allowed. Intangible assets are
carried as historical cost less accumulated amortization and impairment.
Intangible
assets have been argued to be one possible contributor to the disparity between
company value as per their accounting records, and company value as per their
market capitalization considering this argument, it is important to understand
what an intangible asset truly is in the eyes of an accountant. A number of
attempts have been made to define intangible assets. Despite difficulty to
carryout in practice the problem there are a number of performance measure of
intangible assets presented in the literature also applying them in practice
see example mouritse et al, (2003), ratuating et al (2004), currently, there is
very little experience on how different organizations are using performance
measurement to manage their intangible
assets is systematically allocated to expenses allowed to exceed forty years.
The process of allocating the cost of intangible assets to expenses is called
amortization and companies almost always use the straight line method to
amortize intangible assets.
Furthermore, this issues is so important to business
organization in that if adequately maintained it bring about good relationship
between the organization and the society. In view of this study which is
narrowed down to guinness Nigeria Plc can approximately be describe as one of
the most prominent and well known company in the country. The company
celebrated its 50th year (Golden Jubilee) in the year 2002. Now it
is obvious that it has been in existence since the past 53 years in Nigeria
and the demand for it product, no doubt has continue to grow and its has indeed
remained consistently high all through the years. The company majors in
production of small and big Guinness stock, bear, harp, guilder, spark, malta
guinness. It also produced satzenbian beer. This company has branches in various
parts of the country since early seventies precisely 1974. It first production
plant was established at Ikpoba scope of Benin
city. This date the company has continued grow and it
remains the most dominant and prominent companies in the Brewery industry.
1.2 STATEMENT OF THE PROBLEM
Management accountant have long recognized that for
many product the proportion of indirect overhead costs has tended to increase
firms, make greater use of intangible investments to produce their input and to
manage their business strategies. Such observation driven by increased product,
complexity and often arising from the adoption of mass customization strategies
led to the development techniques such as activity based costing and the balance
score card designed to produce more strategy relevant
costing information and key performance indicators than recognized indicators
than recognized the intangible value drivers of the business. The problems
associated with the research which motivated the researchers to embark in the
study are
1 The generally accepted accounting
principle recognized as financially relevant accurate event that arise from
intangible asset.
2 The GAAP account, process and present
there intangible asset related events.
1.3 OBJECTIVE
OF THE STUDY
The objective of
this work is intended to do the following:
1
To explore the
current range of thinking native to intangible assets.
2
To determine how
such intangible resources in values, recognized and presented in the financial
reporting of companies.
3
To determine
whether accounting for intangible assets enhances accountability, transparency,
and unproved quantity in reporting financial results of the companies
4
To find out if
accounting for intangible asset is cumbersome and create problems
1.4
SIGNIFICANCE OF THE STUDY
The significance on the benefits of accounting for
intangible asset are:
1
It shows
valuation, recognition and presentation of intangible asset.
2
To enhance ac
accountability and transparency in reporting
3
It gives the user
of the financial statement maximum satisfaction and reliability of the
financial statement.
1.5 RESEARCH QUESTION
These are question asked in order to create answer to
the research problems. The questions are
as follows:
1
Should the
generally accepted accounting principles (GAAP) be recognized as financially
relevant and accurate event that arise from intangible assets?
2
How should
generally accepted accounting principles (GAAP) account process and present
these intangible assets.
3
Does accounting
for intangible asset enhance accountability transparency and quality in
reporting?
4
Does the impact of
goodwill as intangible asset provides steady growth and continuous profit when
properly analyzed?
5
Does the
diversified accounting skill and experience of the accountant help in the
account recognition and presentation of intangible assets?
6
Does accounting
for intangible asset in an organization increase customer’s patronage?
7
Does an accountant
follow the statutory requirement in the preparation of intangible asset
account?
8
In accounting, for
intangible assets does it creat problem in the preparation.
9
Should
organizations have adequate skilled personnel in measuring and evaluating accounting for intangible asset?
10 Does the employment of unqualified staff create
problems in accounting for intangible asset?
1.6 RESEARCH HYPOTHESIS
1 Ho: The
diversified accounting skills and experience of the accountant does not help in
the account recognition and presentation of intangible asset.
Hi: The
diversified accounting skills and experience of the
accountant
help in the account recognition and presentation of intangible asset.
2 Ho: The
generally accepted accounting principles (GAAP) account, process and
presentation of intangible asset does not enhance accountability and
transparency in reporting.
Hi: The
generally accepted accounting principles (GAAP) account, process and
presentation of intangible assets enhance accountability and transparency in
reporting.
3 Ho: The
accountant should not follows the statutory requirement in the presentation of
intangible asset.
Hi: The accountant should apply the statutory
requirement in the presentation of intangible asset.
1.7 SCOPE OF THE STUDY
The scope of the study of the researcher delimits its
study to accounting for intangible
assets, the way out (A study of guinness Nigeria Plc Sapele branch Delta State).
1.8 DEFINITION OF TERM
The following are terms associated with the research
work.
1
Intangible Asset
(IA) The dictionary defined intangible
asset as an asset that is saleable though not material or physical
2
Intellectual capital
(IC): is defined as an intangible asset that I not financial or physical and
has been a formalized. Captured and leverages to produce a higher valued asset.
3
Goodwill: Goodwill
is arguable the most conforming intangible asset to (GAAP) it is the excess it
four value over book in a purchase transaction.
4
Financial
statement: According to dictionary of finance defines it as written record of
the financial status of and individual association or business organization.
5
Financial
Reporting; It essentially involves preparing and issuing financial statement
(J.C. Aroh 2010)
Login To Comment