Tony Tollington and Philipp Wachter
Considers some of the assumptions underpinning the utilisation of activity‐based costing (ABC) and throughput accounting (TA) systems in relation to Internet retail shopping. It…
Abstract
Considers some of the assumptions underpinning the utilisation of activity‐based costing (ABC) and throughput accounting (TA) systems in relation to Internet retail shopping. It shows that there is a role for both ABC and TA systems depending on where managerial attention is directed towards supply chain efficiency and/or cost control. Internet retail shopping was chosen because it is a new niche market that favours the maximisation of retail inventory “throughput” while, at the same time, favouring “ABC” because of the substantial fixed overhead costs incurred by many of the major supermarket stores.
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Examines the various brand asset recognition methods used by the accounting profession, within their existing rules, to highlight, first, the restrictive nature of a brand asset’s…
Abstract
Examines the various brand asset recognition methods used by the accounting profession, within their existing rules, to highlight, first, the restrictive nature of a brand asset’s current attachment to purchased goodwill and, second, the restrictive requirement for brand asset recognition to be derived solely from a “transaction or event”. Then examines the latest rule change, FRS10, to assess whether the recognition of brand assets is likely to remain restrictive in the future. It concurs with Murphy’s view that brand asset recognition on the balance still continues to be an accounting exercise which is “fudged”.
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Purchased goodwill conforms to the current accounting definitions of an asset. However, as the descriptive framework contained within this paper will show, purchased goodwill is…
Abstract
Purchased goodwill conforms to the current accounting definitions of an asset. However, as the descriptive framework contained within this paper will show, purchased goodwill is not an asset and, therefore, should not be shown on the balance sheet. This would not necessarily matter, from a marketing viewpoint, was it not for the linkage of brand asset recognition to purchased goodwill asset recognition. Currently, the recognition of a purchased goodwill asset tends to be a prerequisite for the recognition of a brand asset extracted from it. If it can be shown that purchased goodwill is not an asset, then the prerequisite disappears. The widespread recognition of brand assets is then unfettered by its association with purchased goodwill. Weakening the basis for the recognition of a purchased goodwill asset is an important first step in encouraging the accounting profession to devise new ways of dealing with the different kinds of intangible assets that are becoming paramount in the governance of companies.
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This paper examines the boundary within which the recognition of an asset currently takes place. It proposes the establishment of a new boundary based upon “separability” which…
Abstract
This paper examines the boundary within which the recognition of an asset currently takes place. It proposes the establishment of a new boundary based upon “separability” which would allow internally created or home‐grown assets to be recognised on the balance sheet. It provides a new definition of brand assets so that, whether purchased separately or as part of goodwill or internally created by a business, brands can be recognised as assets within a new boundary.
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This paper presents an examination of the cognitive assumptions underpinning the accounting recognition of assets, in particular, internally created intangible assets such as…
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This paper presents an examination of the cognitive assumptions underpinning the accounting recognition of assets, in particular, internally created intangible assets such as brands, software and patents. The purpose is to examine, in broad terms, how accountants view these assets and, also, to assess whether accountants, themselves, are aware of the restrictive nature of their disclosure practices. It is supported by a small questionnaire of accountants to see whether there is some support for this assertion. Intangible assets are becoming paramount in the governance of companies and it is, therefore, pertinent for management to have relevant financial information about them. An important first step is to persuade accountants to recognise them.
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Tony Tollington and Jonathan Liu
Examines the weaknesses of the current UK and US definitions of an asset. Presents an argument for them to be updated to include valuable internally created intangible assets…
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Examines the weaknesses of the current UK and US definitions of an asset. Presents an argument for them to be updated to include valuable internally created intangible assets, such as brands and software, which currently fall outside the scope of them.
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Addresses the UK accounting definition of an asset from a practical, theoretical and critical perspective. It suggests that it is a flawed definition in need of change. The…
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Addresses the UK accounting definition of an asset from a practical, theoretical and critical perspective. It suggests that it is a flawed definition in need of change. The accounting definition (UK and US) recognises assets arising from a “transaction or event”, a basis which, inter alia, is inadequate for the task of recognising often hugely valuable, internally created assets, such as brands, software and research patents. As providers of financial information to management, the accounting profession has a duty to account for all the tangible and intangible assets of a business. However, as this paper shows, there are many practical circumstances in which it fails in this task.
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Nevine El‐Tawy and Tony Tollington
The purpose of this paper is to present asset recognition criteria based on the idea that an asset should be functional, separable and measurable and that financial recognition…
Abstract
Purpose
The purpose of this paper is to present asset recognition criteria based on the idea that an asset should be functional, separable and measurable and that financial recognition should be triggered by the recognition of an artefact.
Design/methodology/approach
Criteria is applied to four organisational assets, that is, those intangible assets that are unlikely to be reported in the accounting domain.
Findings
The criteria is applied in order to show how one may expand the basis on which assets can be reported financially to elements of intellectual capital as well as financial capital.
Originality/value
Artefact‐based asset recognition criteria could be a conduit through which intellectual capital could enter the accounting domain, a domain dominated by the maintenance of financial capital, not intellectual capital.
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Tony Tollington and Nevine El‐Tawy
This paper seeks is to enhance our understanding of intangible recognition by embracing an artefact‐based approach.
Abstract
Purpose
This paper seeks is to enhance our understanding of intangible recognition by embracing an artefact‐based approach.
Design/methodology/approach
The paper presents an artefact‐based approach to intangible asset recognition, an artefact being a physical and visual representation (typically, documentary) of expended human intellectual and physical creativity. This output orientation (what people create: artefact‐based outputs) is compared to an input orientation (the investment inputs in human “assets”) using artefact‐based asset recognition criteria that have already received some exposure in the marketing literature in respect of brands.
Findings
Emphasis is placed on outputs, i.e. what people create, rather than on the more familiar input orientation, which focuses on investments in human assets. When compared to an output orientation, the more familiar input orientation is an unsatisfactory basis on which to recognise human assets.
Practical implications
The asset recognition criteria provide a useful checklist by which to delineate an intangible asset from an expense.
Originality/value
The criteria have already been applied to brand assets in the marketing domain. It is now being applied for the first time to human assets.