• Subject Name : Accounting and Finance

Reporting and Disclosure of Intangible Assets

Executive Summary of Crown Resorts Limited Analysis

This report will mainly focus on the determination of impacts due to introduction of the accounting standard IAS 38 or AASB 138. The standard dictates about the measurement, determination, recognition and valuation of intangible assets of a company. The company whose intangible assets are going to be discussed in this report is Crown Resorts Limited which is conducting the business of operating and managing hotel and resorts. It is also one of largest entertainment and gaming groups in Australia. The analysis in the report will primarily focus on how this accounting standard is going to impact the reporting of internally generated intangible assets (IGIAs) and acquired intangible assets. The report is also going to disclose the contradictions that have been occurred due to AASB138/ IAS38 in the accounting of intangible assets.

Table of Contents


IAS 38/ AASB 138 for Intangible Assets.

AASB 136 or IAS 36 for Impairment of Assets.

Acquired intangible assets.

Internally generated intangible assets (IGIA)

Policy of Crown Resorts for Intangible Assets.




Introduction to Crown Resorts Limited Analysis

Australian Accounting Standards Board (AASB) in convergence with IFRS has been introducing and updating various domestic accounting standards as per international requirements and guidelines, AASB 138 is one of such standard. It sets out the definition of intangible assets present in the balance sheet of the company. AASB 138 states how to identify an intangible asset, ways to measure such assets, and determines the requirements for their proper disclosure.

AASB 138 states how to identify an intangible asset, ways to measure such assets, and determines the requirements for their proper disclosure. Australian Accounting Standards Board (AASB) in convergence with IFRS has been introducing and updating various domestic accounting standards as per international requirements and guidelines, AASB 138 is one of such standard. It sets out the definition of intangible assets present in the balance sheet of the company.

Also, it creates a major contradiction in the recognition measurement, accounting and reporting of various intangible assets and thus successfully hides the material information from investors and other stakeholders. AASB 138 says that the intangible assets that have been acquired under the process of acquisition or merger (M&A) are required to be recognized as assets on a mandatory basis, but on the other hand, it also states that the assets that have been internally generated within the entity are not allowed to be recognized as an intangible asset.

Crown Resorts Limited has accumulated and acquired various intangible assets in the course of its business. The major intangible assets in the company’s balance sheet is license which is required for various operational activities including gaming and gambling, hotel, restaurant and liquor services, etc.

IAS 38/ AASB 138 for Intangible Assets

As per AASB 138, an outline has been drafted for the accounting requirements of intangible assets in AASB 138, which states that, intangible assets are the assets which do not have any physical identity or substance but has a monetary value. Intangibles are typically utilized in production or supply of goods or services, for administrative operations or for renting to third parties (Denicolai, Ramirez and Tidd 2016). 

The main aim of introducing AASB 138 for intangible asset is to provide appropriate distinction and accounting treatment for assets which are acquired from outside and which are internally generated. The standard obligates the business organizations to only recognize an asset as intangible if it meets the prescribed criteria.

AASB 138 also states that the intangible assets that fulfill the appropriate criteria of recognition are initially required to be measured and recognized at cost but later periodical impairment checks are required to be conducted on a periodical basis. The impairment can be done using revaluation model to measure its fair value. The other intangibles can be amortized over their useful lives, similar to depreciation of tangible assets Vetoshkina and Tukhvatullin 2014).

AASB 136 or IAS 36 for Impairment of Assets

According to section 136 of AASB or 36 of IAS, intangible assets which do not have specific useful or definite useful life cannot be measured with full accuracy. Therefore, AASB 136 specifies guidelines to test such assets for periodical impairments because determination of exact useful life of such assets is impossible and thus regular depreciation cannot be calculated and charged (Lim et al. 2018).

The purpose of the standard is that the intangibles must not get carried forward at a higher amount than its recoverable value. Hence, the intangible assets in the balance sheet of Crown Resorts are higher of the following:

  1. Market value minus cost of disposal
  2. The carried forward value that is reflecting in the position statement.

As per the annual report, the company (under AASB 136) is conducting tests for impairments and charges impairments whenever the tests indicates about impairment for its various intangible assets. However, for some other assets like goodwill, Crown Resorts conduct the impairment test on regular intervals. The impairment tests for goodwill have been conducted at least once in an annual financial period. All the related valuations are shown in the following section of policy of crown resorts for intangible assets (Su and Wells 2015).

Acquired Intangible Assets

An acquired intangible asset is either acquired during the course of mergers and acquisition (M&A) or separately purchased. The cost of acquired Intangible Assets is:

  • Purchase cost including duties and taxes after making deductions for trade discounts and rebates; and
  • All other costs those are directly attributable for preparing the intangible asset for its targeted use (Ji and Lu 2014).

Now goodwill gets accumulated during acquisition or merger but it is not accountable under jurisdiction of AASB 138. An important to note that internally generated goodwill accounts under the AASB 138, but it is not allowed to get recognized as intangibles because it does not have an identifiable resource.

Internally Generated Intangible Assets (IGIA)

According to AASB 138, the recognition of internally generated intangible assets like patents and copyrights should be done when such assets completes the research phase and reach the development phase. 

Policy of Crown Resorts for Intangible Assets

Intangible assets as per AASB can be defined as the assets with considerable value but zero physical existence, for example assets like goodwill acquired during merger or acquisition, patents, copyrights, trademarks, brand recognition, etc. which are generated internally can be recognized as intangible assets (Ienciu and Matiş 2014).

It is important to note that the financial assets like stocks, bonds, etc. have zero physical substance but derives a considerable amount of value. But on the basis of lack of physical existence and presence of value, such financial assets cannot be considered as intangible assets because their value is derived from the value of their contractual claims.

The company has the following intangible assets

  • Licenses

As per the annual report of Crown Resorts, the licenses are carried at cost less any accumulated impairment losses and any accumulated amortization. The management of the company regularly makes assessment of the casino license’s carrying value to ensure they are carried at their recoverable amount. The casino license has been carried at cost of acquisition. The Melbourne licenses are being amortized using the straight line method for the remaining life of the license which will end in 2050. The license of Perth has an indefinite useful life and, therefore, no amortization can be charged. Therefore an annual impairment assessment is made on the Perth license. The Sydney license will charge for Amortization once the property related to Sydney license is operational (Swanson 2018).

Intangible Assets - Licenses







Balance at the beginning of the financial year



Amortization expense



Balance at the end of the financial year




Cost (gross carrying amount)



Accumulated amortization and impairment



Net carrying amount



  • Goodwill

The goodwill on acquisition at Crown Resorts has been initially measured at cost. It is excess of the transferred consideration over the net acquired assets and assumed liabilities. After initial recognition, the acquired goodwill has been measured at cost minus accumulated impairment losses, because it cannot be amortized.

At Crown Resorts, review for impairment of goodwill is taken place at least annually. The frequency can be enhanced if events indicate about possible impairments in carrying value.

  • Other intangible assets – Acquired both separately and from a business combination

Separately acquired intangible assets in Crown Resorts get capitalized at cost. The assets which are acquired in business combination are capitalized at fair value as at the date of acquisition. After initial recognition, the cost model gets applicable on these intangible assets (McInnis and Monsen 2017).

Other Intangible Assets



Casino Management Agreement



Year ended 30 June 2019


At 1 July 2018, net of accumulated amortization and impairment




















Exchange differences





Amortization expense





At 30 June 2019, net of accumulated amortization and impairment





As at June 2019


Cost (Gross Carrying amount)





Accumulated impairment and amortization





Net carrying amount





The reason that expected impacts of AASB 138 were not fully realized is that Crown Resorts failed to derecognize its intangible assets as forecasted by the AASB authorities while developing the accounting standard. Also, it has been observed that the responsible authorities did not clearly communicate (prior to the implementation of the standards) the major differences between recognition, accounting and measurement of internally generated asset and acquired intangibles to the users. As a result, Crown Resorts made a disclosure in its financial report that their purchased intangible assets (if any) will be recorded at cost, since derecognizing criteria is not available. Apart from that Crown Resorts did not make any statement or disclosure and thus provide incomplete or poor quality information in its annual reports (Crown Resorts 2020).


Due to the introduction of accounting standard AASB 138, various companies, and related stakeholders across industries have been facing various difficulties due to its evident drawbacks (as discussed in the report) which allows the management and auditors of the companies to hide material information related to intangible assets and their impacts upon the company. In other words, it masks the overall contributions and impact of the presence of internally generated intangible assets like copy writes and brands on the enterprise (Sinclair and Keller 2014).

As per discussion made in the report, intangible assets that have been purchased (Licenses) and acquired (Goodwill and others) by Crown Resorts are compulsorily required to be recognized as an intangible asset. However, on the other hand the company is not allowed to make similar recognition when it internally generates intangible assets.

The major reason behind the above mentioned contradiction to recognize similar assets is that different accounting standards are available at international and domestic (Australian) levels. For example, IAS 38 mentions about the intangible assets but does exclude the goodwill that has been acquired which comes under the IFRS 3 jurisdiction for business combinations (Denicolai, Ramirez and Tidd 2016)

The above mentioned contradiction has become a topic of debate about which the accounting and auditing authorities are fully aware. That is why various attempts have been taken to update the accounting standard AASB 138. Therefore it can be stated that in the current period, no single or acceptable method is available to evaluate internally generated intangible assets.

Conclusion on Crown Resorts Limited Analysis

AASB 138 states how to identify an intangible asset, ways to measure such assets, and determines the requirements for their proper disclosure. Australian Accounting Standards Board (AASB) in convergence with IFRS has been introducing and updating various domestic accounting standards as per international requirements and guidelines, AASB 138 is one of such standard. It sets out the definition of intangible assets present in the balance sheet of the company.

Crown Resorts Ltd has purchased and acquired various intangible assets through various process and events. The most important purchased asset in the balance sheet of the company is Licenses, the company is amortizing the licenses with definite lives, and other licenses are reviewed for impairments on a regular basis. For other intangibles including goodwill, review for impairment is taken place at least annually or more frequently if required.

References for Crown Resorts Limited Analysis

Cheung, E., Evans, E. and Wright, S., 2008. The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets. Australian Accounting Review, 18(3), pp.248-256.

Crown Resorts. 2020. Annual Report 2019. https://www.crownresorts.com.au/CrownResorts/files/09/09b9547d-9e41-4d83-962f-09c0efbe7757.pdf

Denicolai, S., Ramirez, M. and Tidd, J., 2016. Overcoming the false dichotomy between internal R&D and external knowledge acquisition: Absorptive capacity dynamics over time. Technological Forecasting and Social Change, 104, pp.57-65.

Ienciu, N.M. and Matiş, D., 2014. Inflection points in the development of IAS 38. Journal of Financial Reporting and Accounting.

Ji, X.D. and Lu, W., 2014. The value relevance and reliability of intangible assets: Evidence from Australia before and after adopting IFRS. Asian Review of Accounting, 22(3), pp.182-216.

Lim, S.C., Macias, A.J. and Moeller, T., 2018, June. Intangible assets and capital structure. In Paris December 2016 Finance Meeting EUROFIDAI-AFFI.


McInnis, J.M. and Monsen, B.R., 2017. Are the recorded values of acquired intangible assets indicative of their future payoffs?. SSRN. https://ssrn. com/abstract, 2956669.

Sinclair, R.N. and Keller, K.L., 2014. A case for brands as assets: Acquired and internally developed. Journal of Brand Management, 21(4), pp.286-302.

Su, W.H. and Wells, P., 2015. The association of identifiable intangible assets acquired and recognised in business acquisitions with postacquisition firm performance. Accounting & Finance, 55(4), pp.1171-1199.

Swanson, Z.L., 2018. Internal Intangible Asset Effect on Firm Valuation. Available at SSRN 3134117.

Van Der Spuy, P.V.A., 2015. Non-recognition of internally generated brands: implications for the usefulness of financial statements. Journal of Economic and Financial Sciences, 8(3), pp.808-822.

Vetoshkina, E.Y. and Tukhvatullin, R.S., 2014. The problem of accounting for the costs incurred after the initial recognition of an intangible asset. Mediterranean Journal of Social Sciences, 5(24), p.52.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help

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