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The criteria that can be applied to the breakdown of equity components constituting the estate of the company - intangible and tangible assets in accordance with U.S. GAAP and IAS / IFRS


  • Markéta Novotná


The paper focuses on financial reporting of long-lived assets. The author's aim was to analyze the approach of two major accounting principles - IAS/IFRS and US GAAP. Both of the principles address following issues: * initial recognition and measurement, * depreciation: allocation of capitalized costs over the useful life of the asset, * disposal of the asset. Broadly accepted classification of the long-lived assets divides the whole group into two parts: tangibles and intangibles. General definitions and recognition criteria are covered by the framework. Particular standards dial then with special matters. Although both international approaches have a lot in common, several differences emerge: * US GAAP do not allow to capitalize internally developed intangibles,however developed intangibles can be capitalized under special conditions according to IAS/IFRS; * impairment: IAS/IFRS allow to cancel or adjust the impairment towards the original value of the asset, US GAAP - once impairment is recognized, it is not permitted to cancel it and to return back to the original value of the asset; * IS /IFRS use historical costs based treatment and allowed alternative treatment - revaluation, US GAAP don't use allowed alternative treatment of the assets - revaluation is not permitted; 138 * IAS/IFRS set the useful life of the intangibles up to 20 years, US GAAP don't restrict the useful life at all. In the process of convergence of IAS/FRS and USGAAPquestions have arisen which of the approaches should be taken as a crucial one for world accounting principles. Standard-setters prepare studies to support their current approach. Unified solution has not been found yet.

Suggested Citation

  • Markéta Novotná, 2004. "The criteria that can be applied to the breakdown of equity components constituting the estate of the company - intangible and tangible assets in accordance with U.S. GAAP and IAS / IFRS," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2004(1), pages 122-139.
  • Handle: RePEc:prg:jnlaop:v:2004:y:2004:i:1:id:252:p:122-139

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    More about this item


    long-term assets; tangible assets; intangible assets; valuation; useful life; depreciation; depletion; amortization; future economic benefit; impairment; dlouhodobý majetek; hmotná aktiva; nehmotná aktiva; ocenění; doba životnosti; odpisování; snížení hodnoty; budoucí ekonomický prospěch;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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