What are the practical difficulties in measuring intangibles

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Reference no: EM132801962

Question - A company has an extensive customer base. Over many years, it has built a detailed customer list, which includes various data including demographics, contact details, purchasing history and preferences. It has spent quite a lot of resources on developing this customer list so that it can effectively target marking campaigns and manage customer relations. A number of businesses have approached the company to purchase their customer list and have offered prices from $60 000 to $210 000. However, the company has decided not to sell at this stage.

(a) Explain whether this customer list would meet the definition and recognition criteria of an asset, applying the principles in 2018 Conceptual Framework.

(b) Requirements in accounting standards currently prohibit the recognition of internally generated intangibles such as customer lists and only allow cost basis to be used for any intangible assets recognised. Do you think these restrictions are justified? What are the practical difficulties in measuring intangibles?

Reference no: EM132801962

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