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Summary IAS 38 Intangible Assets
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This document contains a short, efficient summary of IAS38 as well as class examples dealt with in lectures.
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IAS 38 Intangible AssetsDEFINITION: Defnition
An identifiable non-monetary Asset without physical substance.
Identifiable if:
1. can be separated from business
2. arises from contractual/ other legal rights
Physical substance:
- can be in physical substance form such as a physical disc, legal
documentation, film.
RECOGNITION:
Par (18):
- meet definition
- meet criteria
o probably that expected future economic benefits will flow
o COST can measured reliably
INITIAL MEASUREMENT:
Measured initially @ COST Business
combination
(not in scope)
Government
Separate: grant (not in
scope)
Purchase @
cost
Acquisition
methods
Exchange rules =
IAS 16 and 40
Internally
generated IAS Internally generated
goodwill: shall NOT
be recognized as A (if
own goodwill)
, Separate Acquisition:
Cost comprises of:
a) purchase price + import duties – trade discounts – rebates
b) costs directly attributable to preparing the asset for its intended use.
Examples of costs:
a. costs of employee benefits (IAS19) arising from bringing A to
working condition,
b. professional fees arising from bringing A to working condition
c. cost of testing is A is functioning properly.
Examples of not costs
a. Advertisements and promotions
b. staff training and conducting business in new location
c. admin and overhead costs
Internally Generated Intangible Assets:
Note: if entity cannot distinguish between research and development phase,
default to research only.
Research Planning Not an Expensed
Activities that help obtain new I.A
knowledge
Searching for new findings
Development Design, construction and testing I.A Capitalized to
of: cost of I.A
- pre-use prototypes
- tools, moulds involving new
tech
- pilot plant
Additional Requirement to be met par(57): PIRATE
1. Technically feasibility of completing to sell.
2. Intention to complete it.
3. ability to use or sell A.
4. demonstrate how it will generate future economic benefits.
5. adequate resources available.
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