SUBSEQUENT MEASUREMENT

Question 1

How are initially recognised intangible asset?

Answer 1

Initial Recognition at Cost

Question 2

How are intangible asset measured after initial recognition?

Answer 2

• Cost model, or
• Revaluation model

Question 3

After initial recognition, how is calculated the carrying value of intangible assets applying the cost model?

Answer 3

Carring amount of intangible asset =

Cost
-Accumulated amortisation
-Accumulated impairment losses

Question 4

After initial recognition, how is calculated the carrying value of intangible assets applying the revaluation model?

Answer 4

Carrying amount of intangible asset =

A revalued amount (fair value at date of revaluation)
-Subsequent accumulated amortisation
-Subsequent accumulated impairment losses

N.b If Fair Value is materially different to Carrying Value, then the intangible asset must be revalued.

Question 5

When can the Revaluation model be apply?

Answer 5

Revaluation model can only be applied to intangible assets IF the value of the item can be determined by reference to a homogenous active market

If an intangible asset cannot be revalued because there is no active market then the asset is carried at cost less accumulated amortisation and impairment losses (cost model)

Question 6

How should an entity account for the increase in carrying amount of an intangible asset after revaluation?

Answer 6

• Recognise revaluation increase in OCI and accumulated equity under heading ‘revaluation surplus’
• Recognise revaluation increase in profit and loss to extent that it reverses a decrease of the same asset previously recognised in profit and loss

Question 7

How should an entity account for the decrease in carrying amount of an intangible asset after revaluation?

Answer 7

• Recognise decrease in profit and loss, except
• Where decrease reduces an existing revaluation surplus previously recognised in OCI, this should
  be reduced to zero before recognising remaining decrease in profit or loss