INTRODUCTIONAccording to Robert Swieringa (1997), of Yale's School of Management, "We have arrived at an era of technology, information, and global competition with a model of financial accounting that has been shaped almost 100 years ago." The accounting model itself continues to evolve today. One area in particular concerns the accounting of intangible assets. In the business sector, assets are important economic resources and are classified as tangible or intangible. Material resources are easily viewed as physical objects that include items such as buildings, machinery, vehicles and plants. By their nature, tangible assets are accounted for directly in the balance sheet. However, intangible assets cannot be seen, and when it comes to accounting for them, an important issue that has plagued the business world for many years is how to recognize and account for them (Hadjiloucas and Winter, 2005). This means that a company's financial statements will appear different in another territory using the relevant accounting standards. That said, this paper will review how intangible assets are currently viewed and accounted for, as well as any changes to the accounting model. INTANGIBLE ASSETS Intangible assets can no longer be neglected. 80% of the market value of public companies is made up of intangible assets (Osterland, 2001). In fact, the Harvard Management Update (2001) highlights that the value of intangible assets, on average, has become three times greater than physical assets. Accounting issues relating to intangible assets have always been present, but now these issues are being moved to the forefront. Although for many years businesses and regulators have wrangled with the nature of...... middle of paper... agreed upon agreement. Additionally, both US GAAP and IFRS have resulted in internally generated resources. IAS 38 distinguishes between research and development and all costs relating to research are expensed as they are incurred. However, any costs encountered during development are only capitalized when a company demonstrates that it meets certain criteria. As a result, according to Hadjiloucase and Winter (2005), after an acquisition all profits under US GAAP experience an immediate decline, while profits under IFRS take a few years to ease. By comparison, under US GAAP, any costs that are generated are not capitalized unless a specific rule requires it. An example of this would be software development. According to US GAAP, software can be distinguished between software developed for sale to third parties and software developed for internal use.