Germany Intangibles, Is Recognition = Capitalize ?

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Hello,

I have to write about "Recognition vs Disclosure" for intangible assets.

But i am not sure if i understood the difference between recognize and capitalize

"Recognition is the formal recording of an item in the body the financial statement", so that means you put it in the balance sheet right ?
Capitalize means the same or is there a difference ?

And when you disclose something in the footnotes, does the asset stand in the balance sheet or not ?
 

Fidget

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Recognise and Capitalise are not the same thing. The best example I can think of with intangible assets is those generated by a company through research and development. You would recognise the costs of the research part as an expense in the P&L, but capitalise the development expenditure in the balance sheet (providing it meets the necessary criteria). So in general, recognise means accepting income or expenditure in the P&L as having happened.

On the point of disclosure, the asset doesn't need to be on the balance sheet. These instances are known as 'contingent assets' (or 'contingent liabilities' as the case may be). Depending on the circumstances of them, they might need disclosure in the notes to the accounts but aren't actually in the accounts.
 
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Ok but the Recogniton versus Disclosure Question still covers the topic if an Intangible will be activated in the balance sheet or if it will be expensed in the P&L right ?

I read alot about the differences between activating or expensing internally generated and acquired intangibles, do i have to report about that since capitalize and expense is both recognition ?

Or does the recogniton versus disclosure question only covers the "real" Intangibles like patents, copyrights, customer lists, literary works, and broadcast rights ?

They cannot be recognized, but when i read some disclosures of annual reports i only saw 5-10 sentences about these and almost no information.

And what does the versus in "recogniton versus disclosure" mean then if you cannot choose ?
 

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