S1 - intangible assets Flashcards
what are intangible assets
identifiable (contractual or legal right) non monetary asset without physical substance under the control of the entity
Excludes internally generated goodwill
what is recognition for IA
Recognition - IAS 38
only if it is probable future economic benefits are expected to flow
AND
Costs can be measured reliably
Training, research or advertising cannot be capitalised
what is the rule for internally generated IA
come costs may be capitalised
Research phase - all costs should be recognised as expenses on PoL when they occur
Development phase - if specific criteria is met, then capitalise
what is the strict criteria for development phase to be recognised
completing to stage or use of sale is technically feasible
There is an intention to complete
There is an ability to use or sell
Able to demonstrate that probable future economic benefits exist - commercially viable
Adequate technical, financial and other resources available to complete
Attributable expenditure can be reliably measured
if not capitalised –> written off to profit or loss
how are IA measures
cost model
revaluation model - fair value measured reliably with reference to active market: homogenous items, willing buyers and sellers all the time, prices available to public
Amortisation rather than depreciation
what is amortisation for finite life
over expected useful life
Start when asset available for use
Cease when held for sale or derecognised
Method should reflect pattern of consumption of economic benefit
Residual value generally nil
NBV = orignial cost - depreciation and impairment
what is amortisation for indefinite life
capitalisation under IAS 38
Not amortised but annual impairment review
what is disposal of IA
eliminated from SOFP when disposed of or no further economic benefit
Gain or loss goes on income statement
what are the IA disclosures
method of amortisation
Useful life or amortisation rate
Gross carry value and accumulated amortisation at beginning and end of period
Which line in income statement the amortisation is included in
A reconciliation of the carrying amount at the beginning and end of period
Effective date of revaluation
Carrying amount under revaluation
Carrying amount under cost
Opening and closing revaluation surplus
Methods and assumptions for estimating fair value
Amount of R&D that has been included in income statement
what is goodwill
future economic benefits arising from assets that are not capable of being individually identified and separately recognised
Excess paid for a company’s assets and liabilities in a business combination
Purchase price reflects the ability of the acquiring company to earn future excess profits
