IAS 38 intangible assets

Question 1

intangible asset

Answer 1

is defined as an identifiable non monetary asset without physical substance

Question 2

recognition criteria (all)

Answer 2

*the asset is identifiable
* the asset is controlled by the entity
* the asset will generate future economic benefits for the entity
* the cost of the asset can be measured reliably

Question 3

asset is identifiable if it

Answer 3

*is separable
( capable of being separated and sold ,transferred ,licensed, rented or exchanged, either individually or as part of a package) /
* it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations

Question 4

amortisation

Answer 4

an asset with a finite useful life must be amortised on a systematic basis over that life .straight line method with zero residual value is used.
an asset with indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. is should not be amortised but tested for an annual impairment review.

Question 5

research

Answer 5

• defined as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding
  research expenditure cannot be * recognised as an intangible asset

Question 6

Development cost

Answer 6

defined as the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices , products, processes, systems or services before the start of commercial production or use

Question 7

recognition criteria for development costs

Answer 7

IAS 38 says that development expenditure must be recognised as an intangible
asset if the entity can demonstrate that:
* the project is technically feasible
* the entity intends to complete the intangible asset, and then use it or sell it
* the intangible asset will generate future economic benefits
* it has adequate resources to complete the project
* it can reliably measure the expenditure on the project.