Intangible Assets

Question 1

IAS 38 - Intangible Asset Def,

Answer 1

An identifiable, non-monetary asset without physical substance.

Question 2

Initial Measurement

Answer 2

Dr. Intangible asset
Cr. Bank

Question 3

Subsequent Measurement - Cost Model

Answer 3

Similar to IAS 16 - Original cost - amortisation. Only if the the Intangible has an UEL

Question 4

Revaluation Model

Answer 4

Not used that often for intangible.

If an active market has been obtained the revaluation model would work the same as IAS 16

Question 5

Research and Development - IAS 38

Answer 5

Research = Original and planned investigation, with the prospects of gaining new scientific knowledge and understanding.

Development = Application of research planned for design before the start of commercial use.

Question 6

Treatment of Research and Development

Answer 6

Deemed as research = expense incurred and immediately written off the P&L

Deemed as development = expense should be capitalised if the follow criteria are met.

Probable
Intention to use
Reliable measurements
Adequate resources to complete
Technically feasible
Expected to be profitable

When costs are capitalised, amortisation should be charged as normal over the UEL of the development costs. Amortisation starts from the date that the commercial production begins.