Scribd
Upload
21 views8 pages

Intangible Assets

Uploaded by

Alex
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
21 views8 pages

Intangible Assets

Uploaded by

Alex
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 8

IAS 38

Intangible Assets
Intangible Assets
• It is an identifiable non-monetary asset without physical substance
• Examples include;
• Goodwill
• Computer software
• Patents
• Copyrights
• Customer lists
• Import quotas
• Customer and supplier relationships
Recognition criteria
An entity should record intangible asset if ALL of the following criteria are
met:
• Asset is identifiable
• Asset is controlled by entity
• Asset will generate future economic benefits for entity
• Cost of asset can be measured reliably

- If not met the criteria, then it should be charged to statement of profit or


loss
- If charged as expense, then later cannot be capitalized later
Recognition
• Initial recognition
- It is measured at cost

• Subsequent measurement
i) Cost model
- Cost less (-) accumulated amortization and impairment

ii) Revaluation model


- Fair value less (-) accumulated amortization and impairment
Revaluation model
• Can only be used when there is active market
• Active market is where products are homogenous, there are buyers and
sellers to be found at all times and prices are available to the public
• For intangible asset, they are rare so its not used
• But intangibles such as milk quotas, stock exchange seats etc. can be
found

• Revaluations should be made sufficient regularly so the carrying amount


does not differ materially from its actual FV at reporting date
• Gains or losses in revaluations will be same as IAS 16
Amortizations
Must first asset whether the intangibles have finite or infinite useful
lives
• If finite lives, then must be amortized on systematic basis. Will start
when asset is available for use
• If indefinite lives, then should be subject for annual impairment
review
Research and Development expenditure
• Research & Development expenditure cannot be recognized as an intangible
assets, so should be expensed to profit and loss

• For development costs to be recognized as an intangible assets, it should


demonstrate that:
o Probable future flow of economic benefits
o Intends to complete to use/sell
o Reliably measured
o Adequate resource to complete
o Technically feasible
o Expense on the project can be identified
Disclosures
IAS 38 states that an entity must disclose:
• Amount of research and development expenditure expensed in the
period
• Amortization method being used
• Intangibles assets having indefinite useful life and reasons supporting
it
• Date of revaluations, methods and assumptions
• A reconciliation of the carrying amount of intangibles at the beginning
and end to the reporting period

You might also like