The purpose of this paper is to suggest an empirically based model for identification,\r\nrecognition and measurement of internally generated intangible assets (IIAs) that meets the\r\nfundamental qualitative characteristics of useful financial information. The paper sets out to\r\nempirically test observed relations reflecting new product development activities and their\r\neconomic consequences in listed companies, by means of personal interviews with senior\r\nmanagers, selected on the basis of their knowledge in the specificities of the innovation\r\nprocess in their firm by means of a phenomenographic analysis the identified relations are\r\nconceptualized in terms of logically related categories. There seems to be a match between\r\nthe identified observed relations and the recognition requirements that International\r\nAccounting Standard (IAS) 38.57 sets out, which indicates that the requirements are relevant\r\nand information meeting the requirements may faithfully represent what it purports to\r\nrepresent or reasonably can be expected to represent. By relating the recognition and\r\nmeasurement of IIAs to the proposed model the linkage between IIAs and related\r\norganizational mechanisms will be made more explicit which may improve the\r\nrepresentational faithfulness of the financial information. One of the practical implications of\r\nthis study is that an entity specific control system based on the recognition criteria presented\r\nin paragraph IAS 38.57 can improve the robustness of recognized IIAs arising from\r\ninnovative activities. By building a bridge between the dynamic capability literature and the\r\naccounting literature the paper develops a new model of how to account for IIAs.
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