Tasman Resources Limited (Tasman) and Eden Innovations Limited (Eden) have written down their intellectual property assets by $9.3 million in their interim financial reports for the half-year ended 31 December 2022, after ASIC raised concerns. Tasman holds a controlling interest in Eden and, accordingly, Eden’s net assets are consolidated by Tasman.
Following a review of Tasman’s financial report for the year ended 30 June 2022, ASIC raised concerns that Tasman did not carry out impairment testing of the intellectual property assets of its EdenCrete business, on the basis that there were no indicators of impairment. ASIC’s concern was that, on 30 June 2022, Tasman’s market capitalization was significantly below its reported net assets, which is a clear indicator of impairment.
Tasman and Eden have subsequently performed an impairment test of its intellectual property assets using a discounted cash flow model and recorded the write-down.
ASIC reminds preparers of financial reports and their auditors that a fundamental requirement for accounting for intangible assets is to assess at the end of each reporting period whether there is any indication that those assets may be impaired. Where a listed entity’s reported net assets exceed its market capitalization, the recoverable amount of the asset must be estimated.