T7 Intangible assets Flashcards
What is IAS 38 and define it
Intangible asset is an identifiable, non monetary asset without a physical substance
What does identifiable mean?
An asset that can be brought or sold also it can rise from teh purchase of a company (goodwill)
What is the definition of an asset?
Present econmic resource controlled by an entity as a result of past events.
What is Initial Measurement?
Once established that the intangible asset is recognised, the we measure it at cost.
What is Subsequent Measurement? and how much is it used?
Similiar to IAS 16, you have the choose between the cost model or the revaluation model.
What is the cost model?
Similar to IAS 16, the cost model use the original cost less any amortisation.
What is the revaluation model?
Not often used as it requires a market / fair value which is uncommon. But if one is found we use the value given to it when revalued.
When do you amortise an intangible asset?
The date that commercial production begins, however if it does not have an end date.
What is the definition of Research from IAS 38?
Research is an original and planned investigation undertaking with teh prospect of gaining new scentific knowledge and understanding
What is the definition of development from IAS 38?
Development is the application of research findings or other knowledge to a plan or design for the production of new substantially improved materials, devices, products, processes, systems or service before the start of commercial production or use.
How is research and development treated in the accounts?
Research is put on the P&L as it cant be recognised as an asset whereas development, if it meets the critea, can be capitalsied as an intagible asset.
What is the criteria to capitalise development?
PIRATE.
P - Probable that economic benefits will inflow from teh intangible asset (From savings or sale)
I - Intention to use or sell the asset.
R - Reliable measurement of cost.
A - Adequate resources to complete the project.
T - Technical Feasibility (Have the right people to use it)
E - Expected to be profit able.
