Intangible assets Flashcards
What is an intangible asset?
Identifiable non-monetary asset without physical substance
What makes an intangible asset identifiable?
If it is separable and/or arises from contractual/legal rights
How is an intangible asset recognised?
Probable that future economic benefits will flow to the entity
Cost can be measured reliably
What are the costs of intangible assets?
Purchase price + employee costs + legal fees + costs of testing
What models can be used for intangible assets?
Cost: initial cost - accumulated amortisation - impairment loss
Revaluation: fair value - accumulated amortisation - impairment loss
When should an asset be amortised?
If it has a finite useful life from when it becomes available
What are the guidelines on initial measurement of intangible assets?
If acquired as part of a business combination recognise at fair value if separable
Advertising, training, marketing, relocation and reorganisation expensed
Internally generated intangibles never capitalised
Purchased goodwill reviewed for impairment
What should be done to research expenses and some examples?
Recognised as an expense
Obtaining new knowledge, evaluation, search for alternatives, formulations
What should be done to development expenses and what are the criteria?
Qualify for recognition as intangible
Completing will be available for use
Intention to complete
Ability to use and sell
How it will generate probable future economic benefit
What are the disclosure requirements for intangibles?
Financial statements should disclose accounting policies
Each class has similar disclosures to PPE
Financial statements disclose carrying amounts and reasons supporting assessment of indefinite useful life
What is the issue with IAS 38?
Outdated
Brand, market position, intellectual property not recognised
How are digital assets accounted for?
Must mostly meet IAS 38, unless held for sale so accounted for in IAS 2 inventories
