Intangible assets

Question 1

What is the recognition criteria?

Answer 1

1) Definition of an Intangible asset.
2) Definition of an asset.
3) Recognition criteria.

Question 2

Definition of IA?

Answer 2

An identifiable non-monetary asset without physical substance.

Identifiable (separable (can be sold/ transferred / licensed / exchanged / rented) OR arise from a contractual or legal right)
Non-monetary asset (≠ debtors, cash or another financial asset)
Without physical substance (not able to touch it)

Question 3

Definition of an asset?

Answer 3

(In IAS38 the old ‘2010 CF’ definition is used

A resource (entity consume economic benefits)
Controlled by the entity (power to obtain benefits and restrict access)
As a result of a past event (purchased or developed the IA)
Which will result an inflow of economic benefits (sales)

Question 4

Residual value for IA with a FINITE useful life.

Answer 4

Deemed to be zero unless:
- There is a commitment by a third party to purchase the asset at the end of its useful life OR
- There is an active market for the asset and
- It is probable that such a market will exist at the end of the assets useful life.