IAS_38_Flashcards_Final
(35 cards)
What is an intangible asset?
An asset without physical substance the business controls that brings future benefits.
What are examples of intangible assets?
Software, patents, licenses, trademarks, and brand names.
When can an intangible asset be recorded?
probable future benefits + cost is reliably measured
What does ‘identifiable’ mean for intangible assets?
It can be separated or comes from legal rights.
What does ‘control’ mean in IAS 38?
The business can get the benefits and stop others from using it.
Why can’t advertising costs be recognised as Intangible assets?
no guarantee of future economic benefits
How are purchased intangible assets measured?
At cost + directly attributable costs
What costs are included in a purchased intangible asset?
Price, taxes, and direct setup costs.
what is internally generated goodwill and an example?
value a business creates itselfe.g reputation, customer brand loyalty
Can you record internally generated goodwill?
No, internally made goodwill is not allowed on balance sheet
Are research costs recorded as assets?
No, they must be expensed. - P&L
What are research activities?
Original studies to gain new knowledge and understanding.
What are development activities?
Turning research into plans/designs or products.
When can development costs be recorded as assets?
Only if they meet 6 criteria
What are the 6 criteria for capitalising development?
Probable future economic benefits
Intention to complete asset and use/sell it
Resources to complete development and use/sell it
Ability to use/sell asset
Technical feasibility of completing asset
Expenditure - measured reliably
Are startup costs assets?
No, they are expensed.
Can training costs be recorded as assets?
No, they are expensed.
Can advertising be recorded as an asset?
No, it is expensed.
How are internally made intangible assets measured?
Only direct costs are included.
How are intangible assets treated after first recording?
Use cost or revaluation model.
What is the cost model?
cost - amortisation and impairment loss
What is the revaluation model?
if there’s an active market, fair value, - amortisation and impairment losses.
Can revaluation be used without an active market?
No.
How are gains from revaluation recorded?
In other income, unless reversing a past loss.
