Accounting for other intangible assets Flashcards
What is an intangible asset
An identifiable non-monetary asset without physical substance
What does it mean if an asset is separable
The asset is capable of being separated from the entity and sold, transferred, licensed or rented
2 conditions of the recognition criteria
Must be probable that economic benefits will flow to the entity, cost can be measured reliably
3 allowable costs
Employee costs
Professional fees
Testing
4 not allowable costs
Admin and other overheads
Costs of advertising
Promotion
Staff training
When and how is expenditure on research recognised
When it is incurred, as an expense
When and how is expenditure on development capitalised
Once technical feasability and commercial viability are established, there is intention and ability to complete, the measure of expenditure is reliable, there is availiblity of resources, and it will generate future economic benefit
What is the advantage of capitalising assets
Generates a small depreciation charge each year on the SPL rather than a large expense
How is the subsequent measure of intangible assets measured
Either NBV = cost - accumulated amortisation - impairment losses OR cost or revaluation
Calculate depreciable amount
Cost of the asset - its residual vale
Dr and Cr for a increase in value after revaluation
Dr intangible assets
Cr revaluation surplus
Dr and Cr for a decrease in value after revaluation
Dr Amortisation expense
Cr Intangible asset
