Valuation of intangibles - rules and principles for value creation from an accounting perspective

The overarching purpose of the project is to develop an understanding of rules and principles for valuation of intangible assets in contemporary Swedish companies, with a focus on the information technology sector. In the project, we focus on internally generated intangible assets and the micro-level decisions and reasoning behind capitalization (the recordation of a cost as an asset, rather than an expense) of intangibles. Through interviews, we analyze how companies arrive at discretionary approaches to capitalization of intangibles with regard to the prevalent accounting standard IAS 38 through a process of ‘translation’ (the development of internal understandings and interpretations of how general accounting requirements should be materialized at the organizational level). Since capitalization is formally equivalent to recognizing an intangible asset as an economically beneficial innovation, the proposed project contributes to an improved understanding not only of accounting practice but also of strategic innovation approaches of Swedish companies with regard to internally generated intangible assets.