IAS 38 Flashcards
What intangible assets does IAS 38 not apply to?
Financial assets
Exploration and evaluation assets
Insurance contracts
Expenditure on natural resources
Intangible covered by another IFRS
What is an intangible asset?
An identifiable non-monetary asset without physical substance
Characteristics of an intangible asset?
Identifiability
Control
Future economic benefits
What is identifitability?
Is separable from the entity or arises from contractual rights
Examples of intangible assets?
Patented technology
Import quotas
Trademarks
Customer lists
Video and audiovisual materials
Franchise agreements
When is an intangible asset recognised?
Porbable future economic benefits
Can be measured reliably
How can intangibles be acquired
Separate purchase
Exchange of assets
Government grant
Does internally generated intangible assets have separate criteria?
Yes
What if recognition criteria is not met?
Recognised as an expense when it is incurred
What is the probability based on?
Supportable assumptions about conditions that exist over life of the asset
Fair value of a business combination presumption?
It can be measured reliably
Business combination expenditure that does not meet definition of and criteria for an intangible asset?
Form part of amount attributed to goodwill recognised at acquisition date
Reinstatement and IAS 38?
Standard prohibits reinstatement of an asset that was charged as an expense
How are research costs charged?
As an expense
When are development costs capitalised?
When they meet PIRATE criteria
Research and development project acquired in a business combination recognsied?
As an asset at cost
Initial recognition of internally generated brands, mastheads, titles, lists
Are not recognised as an asset
Following items should be charged to expense?
Internally generated goodwill
Start-up costs
Training costs
Advertising costs
Relocation costs
What if entity has made prepayment for items charged as an expense?
Prepayment is recognised as an asset until entity receives related goods or services
How are intangible assets initially measured?
At cost
Cost model in IAS 38?
Cost - accumulated depreciation - impairment
When may revaluation model be used?
If fair value can be determined by reference to an active market. This is uncommon
Scenarios of revaluation model?
Production quotas
Fishing licences
Taxi licences
What if the revalued amount has a finite life?
It is amortised
What is an indefinite life?
No foreseeable limit to period over which asset is expected to generate net cash inflows for the entity
What is a finite life?
Limited period of benefit to the entity
How should cost less residual value of an intangible asset with a finite useful life be amortised?
On a systematic basis over that life
What if amoirtsation pattern can’t be determined reliably?
Amortise by straight-line method. This should be reviewed annually
How is the amortisation charge recognised?
In profit or loss unless another IFRS changes that
What are expected future reductions in selling prices indicative of?
Higher rate of consumption of future economic benefits embodied in an asset
What should happen to an asset with indefinite useful life?
It should not be amortised
How should useful life of indefinite intangible asset be reviewed?
Each reporting period to determine whether circumstances continue to support indefinite useful life of an asset
What if there is a change in useful life from indefinite to finite?
Should be accounted for as an accounting estimate.
What should indefinite intangible asset be assessed for?
Impairment
Amount of residual value for finite useful life?
Normally zero
When does amortisation usually begin with finite useful life?
When asset is available for use
Where are capitalised development costs shown?
Under non-current assets
