Recognition of data ssets:Understanding,debate,and progress
In the current accounting framework,data resources are not independently recognized in corporate financial statements when their value is indeterminable or insufficiently meets asset recognition criteria.Typically,the value of data resources is embedded within internally generated goodwill,which is not acknowledged under Chinese accounting standards unless arising from specific merger transactions.Theoretically,during a business combination not under common control,the value of data resources is subsumed within goodwill,even if its reliability is uncertain.However,in the absence of mergers and acquisitions,data resources are excluded from asset recognition altogether.This study is motivated by the sequential evolution of accounting rules from recognizing goodwill that implicitly includes data resources to potentially isolating data resources as distinct assets.By exploring the interplay between data resources and goodwill,this research aims to analyze the practical and theoretical justifications for incorporating data resources into financial statements.Additionally,it seeks to address the accounting implications of such recognition,shedding light on how these changes might influence financial reporting practices.This topic is particularly relevant in the era of data-driven economies,where the accurate representation of data resources could significantly impact corporate valuation and decision-making.The inclusion of data resources in financial statements has sparked widespread discussions globally.International bodies like the International Accounting Standards Board(IASB)and the Financial Accounting Standards Board(FASB)have actively discussed accounting treatment methods for data assets and have issued a series of guiding principles.Along with the development of the data factor market,the identifiability of data resources has been enhanced,and some data resources can meet the recognition criteria for related assets in the Corporate Accounting Standards.In 2023,the Chinese Ministry of Finance issued the file Provisional Regulations on Accounting Treatment of Enterprise Data Resources to tentatively incorporate data resource accounting into the accounting framework.The provisional regulations are seen as a prerequisite for establishing data rights,circulation,and distribution.However,a voice argues that the inclusion of data resources in financial statements necessitates clear data property rights and the rationality and authenticity of data value determination,which rely on the perfection of the data element market.Starting in 2024,the provisional regulations were officially implemented.However,several issues arose in the annual report of the first quarter of listed companies regarding data resource handling.Among companies disclosing information on data resources,many have subsequently released Notices of Correction to the First Quarter of 2024 Reports.There are also controversies over capitalizing research and development expenses related to data resources as intangible assets,which exerts significant practice pressures not only on the listed companies but also on the audit firms.Misunderstandings about the inclusion of data resources in financial statements,along with the incomplete nature of the data element market,may explain the challenges in implementing the provisional regulations.Against this backdrop,this article focuses on and attempts to discuss the following three issues.First,from an accounting perspective,we discuss the nature of the inclusion of data resources in financial statements.Secondly,we give several reasons for the controversies surrounding the inclusion of data resources.Thirdly,we seek to provide suggestions related to the improvements of data resource accounting regulations.Besides,we discuss how can the element market ensure the development of data resource accounting systems.We first argue that data resources can gradually be separated from self-created goodwill and reflected in the balance sheet as assets that independently generate economic benefits.We then propose that the recognition of data resources is only an accounting regulation,and its role should not be amplified to replace the economic benefits generated by the data resources themselves,nor should it be regarded as a prerequisite for other data infrastructure systems.The recognition of data resources can only play a guiding role in the construction of the data factor market at the current stage.The controversy surrounding the recognition of data resources manifests in two main aspects:identifiability and potential impairment.Finally,we show that the accounting regulation of data resources,at present,tends to be prudent,and this value orientation is compatible with current environmental conditions.With the further improvement of the data factor market,we argue that the demand for accounting information regarding data resources should shift from reliability to usefulness for decision-making.Accordingly,the measurement attribute of data resources should also move towards fair value,and the exploration of a historical cost measurement plus a fair value disclosure approach is needed.
data resourcedata assetdata factordata factor marketgoodwill
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