IAS 38- Intangible Assets Flashcards
Definition of intangible Assets
Identifiability, control, and existence of future economic benefits are necessary for an item to be considered an intangible asset.
Identifiability requires the intangible asset to be distinguishable from goodwill.
Future economic benefits from intangible assets include revenue from sales, cost savings, or other benefits resulting from the asset’s use.
Scope
**Excludes: **
* intangible assets held for sale,
* deferred tax assets,
* assets from employee benefits,
* financial assets,
* goodwill from business combinations, insurance contracts,
* assets held for sale, and
* assets from contracts with customers.
* Specialised activities like exploration and extraction of oil, gas and minerals
Includes:
* Expenditure on advertising,
* training, start-up,
* research, and development activities
* Rights under licensing agreements
Treatment of cost of acquiring or internally generating IA
Expensed when incurreed unless it meets criteria to be capitalised.
Measurement of IA
- Measured at costs if acquired separately.
- Measured at fair value if acquired in business combination.
Phases of internally generated IA
- Research - Expensed when incurred
- Development- capitalised if criteria met.
brands are never capitalised.
What is the cost of an internally generaed IA
Includes all directly attributable costs necessary for its creation, production and preparation.
Past Expenses Not Recognized as Assets
Expenditure initially recognized as an expense cannot be later recognized as part of the cost of an intangible asset.
Measurement After Recognition
the cost model or the revaluation model
Cost model
assets are carried at cost less any accumulated amortization and impairment losses.
Revaluation model:
assets are carried at a revalued amount, being their fair value at the date of revaluation less any subsequent accumulated amortization and impairment losses.
Factors considered when assesing useful life of IA
- expected usage,
- product life cycles,
- technological obsolescence,
- industry stability,
- and legal restrictions
Indefinite not amortized, finite assets amortized over useful life.
Review of Amortization Period and Method
The amortization period and method are reviewed at least annually.
General Disclosures
- Distinuish between internally generated and other intangible assets.
- Useful lives
- Amortisation methods
- Carrying amounts.
- Impairements and changes in estimates.
Specific Disclosures
- Indefinite useful life assets
- Acquired through govt grant
- disclosures on effective dates of revaluations, carrying amount, and reval surplus.
Other disclosures
Encouraged to disclose information on fully amortized intangible assets still in use and significant intangible assets not recognized due to not meeting recognition criteria or acquired/generated before the relevant accounting standard was effective.
