The new accounting of intangible assets: Effects of IFRS 3 on the accounting of intangible assets in acquisition-intense companies on the Stockholm Stock Exchange

Sammanfattning: Intangible assets are often a significant part of Swedish companies’ assets. Most of these are accounted for as goodwill, arising from acquisitions. After EU:s decision to adopt IFRS as the new accounting standard, intangible assets will to a larger extent be recognized separated from goodwill. This thesis aims to quantify this change and to analyze what specific intangibles are affected most by the transition to IFRS. In order to quantify these effects, 30 of Sweden’s largest, most acquisition-intense companies have been studied. The quantitative measurement has been based upon the portion of goodwill of intangible assets, and the growth of specific intangible assets, such as customer relations, brand names, IT, and capitalized research and development. A basic assumption has been that the net change in intangible assets during 2005, the first year with IFRS, is an approximation of how future intangible assets will be comprised. Results show that the goodwill portion of intangible assets will decrease from 84% to 75%. In addition, customer related intangibles have increased dramatically. In the 30 investigated companies, these assets have increased from 811 MSEK in 2004 to 7 bn SEK in 2005. The increase is largely due to identification of intangibles in acquisitions. In conclusion, the change to IFRS has reduced the goodwill portion, and in some cases given rise to significant changes in individual assets, mainly customer relations.