Архів / Archive

UDC 657

Pozharevska Rumiana

D-r, Assoc.prof.

University of  National and World Economy

Sofia, Bulgaria

CHALLENGES FOR THE ACCOUNTING THEORY IN VIEW OF THE RECOGNITION OF NEW INTELLECTUAL PROPERTY ITEMS

Annotation

The issue under consideration in this article is“the new intellectual property items” within the context of their recognition as intangible assets. The author tries to present a conceptual framework for their classification and recognition as accounting items, as well as to define some scientific application problems on this topic.

Key words: intangible assets, new intellectual property items, accounting.

The Convention Establishing the World Intellectual Property Organization (WIPO) defines those items not included in the international protection agreements of the 19^th century [1, 2] as new items. The exceptionally far-sighted approach provides an opportunity for expanding the scope of items which represent the result of the creative activity of people. It is exactly the group of the “new intellectual property items” which is dynamically developing under global economy conditions and absolute digitalization. They create our surrounding environment, they are subject of our professional skills in the setting of business operations, and they radically change the traditional concepts of labour and ways of life. In most cases they originate in the creative skills of man in interdisciplinary spheres of realization. The following rights could be associated with this group: rights on  integrated circuit topographies, computer programs, databases and multimedia products, forms of distribution of intellectual property products in the digital environment (sound-recording, broadcasting through satellite and cable transmission, electronic commerce), products of biotechnology (new plant varieties and animal breeds), traditional knowledge and skills[1] [3,4]. New objects are generated by science and in practice in the field of ecology (for example, greenhouse emission allowance trading schemes). The relationship of ecology and sustainable development appears to be an aspect particularly topical for modern economy. „The environmental component of sustainable development refers to the impact the organization exerts on animate and inanimate nature, including ecosystems, earth, air and water.“ [5]. 

In author’s opinion, the recognition of new intellectual capital for accounting purposes should pass through several stages:

Diagram 1: Stages of recognition of new intellectual capital for accounting purposes

• complexity of recognition of new items as intellectual property of reporting entities, and as intangible assets at a later stage, originates in the following:

• The study of new items requires scholastic attainments on a multitude of specialized terminology,  ambiguously determined and debated in the respective professional fields;
• There is a necessity of developing and establishing new concepts and definitions on an international scale;
• Some of the examined items require new and contemporary rendition and approach to intellectual property system which is supposed to go beyond its traditional  requirements for “novelty and/or originality” as conditions for the grant of protection;
• In some cases, the intellectual property system is put in the role of “establishing moral norms” as a delimitative criterion for the items subject to protection or exclusion of the opportunity for such protection[2];
• The items, products of modern information, digital and telecommunication technologies confront the intellectual property system as a system of legal and economic relationships with the challenge to generate solutions with respect to items and cases of their usage prior to their factual occurrence[3].
• problematic aspects considered so far and relating to the recognition of new items, which appear to be products of the realization of the creative potential of man, as intellectual property of reporting entities, require that the analysis should be carried out basing on the systemic approach in the application of a variety of methods, the most essential of which are: historical, comparative and morphological analysis, expert evaluation method.  
• recognition of the legal protection of new intellectual property items is the first step to the subsequent explorations regarding the possibilities for their recognition as intangible assets and establishment of mechanisms for the realization of their economic potential [6].   It is well-known that not all items which acquire legal protection as intellectual property can be recognized as intangible assets  (for example, unfair competition). National Accounting Standard 38 „Intangible Assets” unambiguously adopted the threshold criteria for the recognition of intangible assets approved by  IAS 38 „Intangible Assets“ [7,8]. The national Accounting Law refers to the accounting standards with regard to the questions concerning intangible assets [9]. In consequence of the adopted accounting standards and threshold recognition criteria, items such as “know-how” and “show-how”, the possession of which leads to a monopoly in a specific sphere of economy, remain out of the scope of intellectual property. Based on the results of the research made on the problems, the author suggests the introduction of the following threshold criteria for the recognition of  new intellectual capital items:

• They have to be a result of the creative activity and intellect of man;
• They have to be rights and relationships arising with regard to that result to which legal protection is to be ensured;
• The mechanism for the realization of their economic potential should be proved;
• They have to be identifiable and should be reliably measured.  

The simultaneous satisfaction of the above specified threshold criteria would ensure the possibility for the recognition of reporting entity’s resources, which are existent at that specific moment but are not recognized as intangible assets, or to recognize as intangible assets items, which are still to be generated. A mandatory preliminary condition for the realization of the recognition process for the purposes of accounting is the good knowledge of the specifics  of the newly generated intellectual capital item, because the alternatives and the recognition aspects for the various items are different, i.e. there is no explicit approach for the entire group.

The application of the suggested criteria to the specific existing new intellectual property items and the examination of the possibilities for their accounting recognition cannot be presented within the confines of the present article. At this stage, the author is only limited to mentioning the problematic issues and aspects for the whole group and to suggesting some new solutions in this regard.  

Bibliographic references:

1. The World Intellectual Property Organization (WIPO), Available from: [http://www.wipo.int] (31.10.2014).
2. Borisov, B.; Intelektualna sobstvenost: politika, pravo i  ikonomika – Rakovodstvo; Universitetsko izdatelstvo “Stopanstvo”,S., 2009,  (Borisov, B.; Intellectual Property: Policy, Law and Economy – Handbook; University Publishing House “Economy”,S., 2009)
3. Borisov. B.; M. Markova; Novi obekti na intelektualnata sobstvenost, Universitetsko izdatelstvo “Stopanstvo”, S., 2002, р.15 (Borisov. B.; M. Markova; New Objects of Intellectual Property, University Publishing House “Economy”,S.,  2002)
4. Bleykni, М., Doklad, predstaven na konferentsia „Intelektualna sobstvenost, internet, elektronna targovia I traditsionni znania“, S., 2001 (Blakeney, М., A paper presented at the Conference on Intellectual Property, Internet, Electronic Commerce and Traditional Knowledge“, S., 2001)
5. Asenov, E., Ustoychivo razvitie na novata korporativna otchetnost, izd. „Stopanstvo“, S., 2006, str. 203 (Asenov, E., Sustainable development of the new corporate reporting, Publishing House „Economy“, S., 2006, p. 203)
6. Pozharevska, R., Intelektualna sobstvenost – priznavane, predstavyane i  opovestyavane za schetovodni tseli, UI „Stopanstvo“, UNSS, S., 2010  (Pozharevska, R., Intellectual Property – Recognition, Presentation and Desclosure for Accounting Purposes, Publishing House „Economy“, UNWE, S., 2010)
7. International Accounting Standards; International Financial Reporting Standards
8. National Financial Reporting Standards for Small and Medium Sized Enterprises (Natsionalni standarti     za finansovi otcheti za malki I sredni predpriyatia)
9. Accounting Law (Zakon za schetovodstvoto), Available from: (27.10.2014)‎