Intangible Assets Flashcards
What is IAS 38?
IAS 38 relates to intangible assets.
The recognition of acquired and internally generated Assets.
What is an intangible asset?
An intangible asset is a recognisable Non-Monetary asset without physical substance.
It must either:
Be separable from the business
Arise from legal or contractual rights.
How are Intangible assets measured?
Initially at cost then:
Amortised over the assets useful life or
If the asset has infinite useful life then not amortisation is applied instead the asset is subject to an annual impairment review.
Are internally generated assets recognised?
Internally generated assets generally cannot be separated from a business so are not recognised.
What is GoodWill?
As found in IFRS3 business combinations.
Goodwill can be calculated as:
the value fo the business as a whole less
Fair value of identifiable Net assets.
Non purchased goodwill aka Inherent Goodwill is not recognised in the financial statements.
Negative Goodwill cannot be capitalised so goes on the P&L as a credit.
Within R&D what is Research?
Research is the planned investigation to gain new scientific Knowledge or understanding.
Cost associated with research are recognised as an expense on the P&L.
Within R&D what is Development?
Development is the application of research to produce new or improved materials, products or processes.
If the development meets a set of criteria it should be capitalised and amortised, if it does not meet the criteria it must be written off to the P&L as an expense.
What are the criteria Development costs must meet to be capitalised?
Probable flow of economic benefit Intention to complete the project Reliable measurement of Development cost Adequate resources available to complete the project. Technically feasible Expected to be profitable.
When can development costs be recognised from?
The date that all criteria have been met.
Amortisation occurs from the date commercial production begins.
