Accounting for Intangible Assets Continues to Be Major FASB Issue
Several Financial Accounting Standards Board (“FASB”) members want to proceed cautiously on overhauling the accounting for intangible assets. During the FASB’s May 11 meeting, outgoing FASB member Lawrence Smith said he is reluctant to move forward on a project without determining what problem must be solved. Fellow board member Harold Schroeder shared similar concerns, remarking that proper research must be conducted to avoid wasting time and resources.
For most of the FASB’s 44-year existence, questions have mounted over accounting for intangible assets. Some of those questions involve how intangible assets should be disclosed on balance sheets, as well as how they should be recognized and measured. Investors, companies and auditors, however, are uncertain on which assets are to be reported and if they must be calculated at either historical cost or fair value. Questions have picked up in recent years since intangibles have become more present in areas like information technology and social media.
Chairman Russell Golden estimates that a project to clarify accounting for intangible assets could take between two to seven years to complete. Additionally, FASB member Harold Monk believes the only way the FASB can address is by taking a holistic approach.