ACCOUNTING TREATMENT FOR DIGITAL PLATFORM APPLICATION

Abstract

The development of digital platforms has increased the importance of accounting. The digital platform does not have a physical substance, so it is difficult to be recognized and valued its valuation. The traditional valuation method can not work well for the digital platform. Therefore, this research attempts to determine the proper accounting treatment for the digital platform based and appraises the value of digital platform by proposing real option method as an alternative approach. This research is using the qualitative method and the research data was collected from Facebook financial reports. The result of this study shows that the digital platform can be recorded as an intangible asset. Moreover, two valuation models either the Black-Scholes model or the Binomial model can be used as a tool for generating value of digital platforms. This research is limited to use the sample of digital platform only from the social media industry.