intangible assets Flashcards
(71 cards)
What is an intangible asset?
An identifiable non-monetary asset without physical substance.
What must an asset meet to be recognized as an intangible asset?
It must be identifiable, controlled by an entity, and expected to provide future economic benefits.
What are the key characteristics of intangible assets?
- Lack of physical form
- Identifiability
- Non-monetary nature
How is control defined in relation to intangible assets?
An entity controls an asset if it can obtain future economic benefits and restrict access to others.
Give examples of intangible assets.
- Patents
- Goodwill
- Intellectual property
- Computer software
- Copyrights
- Customer lists
- Trademarks
- Franchises
What does IAS 38 govern?
The accounting for intangible assets with specific exceptions.
Name some exceptions to IAS 38.
- Financial assets (IAS 32)
- Exploration and evaluation assets (IFRS 6)
- Development and extraction costs of minerals, oil, etc.
- Intangible assets held for sale (IAS 2)
- Deferred tax assets (IAS 12)
- Leases (IFRS 16)
- Employee benefits (IAS 19)
When should an intangible asset be recognized?
If it is probable that expected future economic benefits will flow to the entity and the cost can be measured reliably.
What is the initial measurement for a separately acquired intangible asset?
At cost, including purchase price and directly attributable expenditure.
How are intangible assets acquired in a business combination measured initially?
At their fair value at the acquisition date.
What is the treatment for internally generated goodwill?
It shall not be recognized as an asset.
What phases are involved in assessing internally generated intangible assets?
- Research phase
- Development phase
What is the treatment of expenditure during the research phase?
Recognized as an expense when incurred.
What conditions must be met for an intangible asset from the development phase to be recognized?
- Technical feasibility
- Intention to complete
- Ability to use or sell
- Generation of future economic benefits
- Availability of resources
- Reliable measurement of expenditure
What are the accounting policy choices for measuring intangible assets after recognition?
- Cost model
- Revaluation model
Describe the cost model for intangible assets.
Carried at cost less accumulated amortization and impairment losses.
What is the revaluation model for intangible assets?
Carried at fair value less subsequent accumulated amortization and impairment losses.
How are finite useful life intangible assets amortized?
Systematically over their useful life, beginning when available for use.
When are intangible assets with indefinite useful lives tested for impairment?
At least annually.
What is necessary for derecognition of an intangible asset?
- Disposal
- No expected future economic benefits
What disclosures are required under IAS 38 for intangible assets?
- Useful lives (finite or indefinite)
- Amortization rates and methods
- Carrying amounts
- Reconciliation of carrying amounts
What must be disclosed for intangible assets with indefinite useful lives?
Carrying amount and reasons supporting the indefinite assessment.
What amendments have been made to IAS 38?
- Revenue-based amortization
- Consequential amendments from other IFRS standards
- Clarifications on depreciation and amortization methods
What is the definition of an intangible asset according to IAS 38?
An identifiable non-monetary asset without physical substance. An asset is identifiable if it is separable or arises from contractual or other legal rights.