IAS 38- Intagngible Assets Flashcards
1
Q
What resulted in the development of IAS 38
A
- without a standard covering intangibles companies would be free to come up with all kinds of values for their internally generated brands, recognise them on the SFP and inflation the values of their net assets
2
Q
IAS 38 defines an intangible asset as
A
- an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services
- an identifiable asset can be disposed of separately without disposing of a whole business
3
Q
Types of intangible assets include
A
- goodwill
- brands
- computer software
- trademarks
- customer lists
- copyrights
- research and development costs
4
Q
All internally generated intangibles should be accounted for as either…
A
- research or development expenditure
5
Q
Purchased goodwill
A
- recognised on SFP of group account as an asset do not amortise (carry out impairment entitled review)
6
Q
Non-purchased goodwill
A
- not recognised as an asset
7
Q
Other separately purchased intangibles
A
- recognise on SFP and amortise over useful life
8
Q
Other non-purchased intangibles
A
- treat as research and development with the exception of a specific exclusions including internally generated brands which are not recognised
9
Q
Research phase
A
- all expenditure charged to P&L
- because probability that economic benefits will be generated from the entity is too uncertain at this stage (conceptual framework)
10
Q
Development phase
A
- more advanced stage
- may be possible to identify an intangible asset which should be recognised
- recognised on SFP and amortised over their useful economic life
- amortisation should commence when the asset is available for use
11
Q
Certain criteria for internally generated intangibles which must be met for the asset to be recognised in the SFP
A
- probable economic benefit generated
- intention to complete and use it or sell
- resources available to do so
- ability to use or sell
- technically feasible to complete the asset
- expenditure
12
Q
Purchased intangibles
A
- meet recognition criteria
- asset recognised on SFP and amortised over useful economic life
- an impairment review should be carried out
- Intangibles can only be revalued if an active market exists for the asset which is very rare
13
Q
Purchased goodwill definition
A
-intangible asset but is covered by IFRS 3 Business Combinations as it will only arise when one company acquires another and a group is created
14
Q
Internally generated (non-purchased) goodwill
A
- the same as purchased goodwill definition
- however unless a company is being bought the value of goodwill cannot be reliably measured and it may be difficult to identify future economic benefits (not recognised on the SFP)
