Intangible Assets: Activities That Had Been Issued in July 1978

IAS 38
Intangible Assets
In April 2001 the International Accounting Standards
Board (Board) adopted IAS 38 Intangible Assets, which had
originally been issued by the International Accounting
Standards Committee in September 1998. That Standard had
replaced IAS 9 Research and Development Costs, which had
been issued in 1993, which itself replaced an earlier
version called Accounting for Research and Development
Activities that had been issued in July 1978.
The Board revised IAS 38 in March 2004 as part of the

first phase of its Business Combinations project. In
January 2008 the Board amended IAS 38 again as part of
the second phase of its Business Combinations project.
In May 2014 the Board amended IAS 38 to clarify when the
use of a revenue-based amortisation method is
appropriate.
Other Standards have made minor consequential amendments
to IAS 38. They include IFRS 10 Consolidated Financial
Statements (issued May 2011), IFRS 11 Joint Arrangements
(issued May 2011), IFRS 13 Fair Value Measurement (issued
May 2011), Annual Improvements to IFRSs 2010–2012 Cycle
(issued December 2013), IFRS 15 Revenue from Contracts
with Customers (issued May 2014), IFRS 16 Leases (issued
January 2016), IFRS 17 Insurance Contracts (issued
May 2017) and Amendments to References to the Conceptual
Framework in IFRS Standards (issued
March 2018)
Amortisation is the systematic allocation of the depreciable amount of an
intangible asset over its useful life.
An asset is a resource:
(a) controlled by an entity as a result of past events; and
(b) from which future economic benefits are expected to flow to the
entity
Carrying amount is the amount at which an asset is recognised in the

statement of financial position after deducting any accumulated
amortisation and accumulated impairment losses thereon.
Cost is the amount of cash or cash equivalents paid or the fair value of
other consideration given to acquire an asset at the time of its acquisition
or construction, or, when applicable, the amount attributed to that asset
when initially recognised in accordance with the specific requirements of
other IFRSs, eg IFRS 2 Share-based Payment.
Depreciable amount is the cost of an asset, or other amount substituted for

cost, less its residual value.
Development is the application of research findings or other knowledge to a

plan or design for the production of new or substantially improved
materials, devices, products, processes, systems or services before the start
of commercial production or use.
Entity-specific value is the present value of the cash flows an entity expects to
arise from the continuing use of an asset and from its disposal at the end
of its useful life or expects to incur when settling a liability.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. (See IFRS 13 Fair Value Measurement.)
An impairment loss is the amount by which the carrying amount of an asset

exceeds its recoverable amount.
An intangible asset is an identifiable non-monetary asset without physical

substance.
Monetary assets are money held and assets to be received in fixed or

determinable amounts of money.
Research is original and planned investigation undertaken with the

prospect of gaining new scientific or technical knowledge and
understanding.
The residual value of an intangible asset is the estimated amount that an

entity would currently obtain from disposal of the asset, after deducting
the estimated costs of disposal, if the asset were already of the age and in
the condition expected at the end of its useful life.
Useful life is:
(a) the period over which an asset is expected to be available for use by
an entity; or
(b) the number of production or similar units expected to be obtained
from the asset by an entity.
Recognition and measurement

The recognition of an item as an intangible asset requires an entity to
demonstrate that the item meets:
(a) the definition of an intangible asset ; and
(b) the recognition criteria
An intangible asset shall be recognised if, and only if:

(a) it is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity; and
(b) the cost of the asset can be measured reliably.
An entity shall assess the probability of expected future economic

benefits using reasonable and supportable assumptions that represent
management’s best estimate of the set of economic conditions that will
exist over the useful life of the asset.
An entity uses judgement to assess the degree of certainty attached to the flow
of future economic benefits that are attributable to the use of the asset on the
basis of the evidence available at the time of initial recognition, giving greater
weight to external evidence.
An intangible asset shall be measured initially at cost.

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IAS 38

The Board revised IAS 38 in March 2004 as part of the

Carrying amount is the amount at which an asset is recognised in the

Depreciable amount is the cost of an asset, or other amount substituted for

Development is the application of research findings or other knowledge to a

An impairment loss is the amount by which the carrying amount of an asset

An intangible asset is an identifiable non-monetary asset without physical

Monetary assets are money held and assets to be received in fixed or

Research is original and planned investigation undertaken with the

The residual value of an intangible asset is the estimated amount that an

Recognition and measurement

An intangible asset shall be recognised if, and only if:

An entity shall assess the probability of expected future economic

An intangible asset shall be measured initially at cost.

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