Professional Documents
Culture Documents
Ways To Acquire Intangible Asset: Intangibles
Ways To Acquire Intangible Asset: Intangibles
Objective: To set out the treatment of intangible assets that are Assets acquired as a result of a government grant (i.e. granting
not covered by other accounting standards - e.g. Goodwill of Govt Licence) may be capitalised at fair value, along with a
acquired in a business combination is covered by IFRS 3 corresponding credit for the value of the grant. Asset and grant
BUSINESS COMBINATIONS Most long term intangible assets are will be amortised/released over useful life. Net effect on profits
amortised over their expected useful life ( amortisation is the is nil
equivalent of depreciation)
FAR 1
F
FAR
o An Intangible asset which could be
revalued is a Taxi Licence, Milk Quotas,
Fishing Quotas 17
Measurement of Intangibles:
Subsequent Measurement The financial statements should disclose the following for
– Cost Model (Cost – Acc Amortisation - Any Imp. each class of intangible assets, distinguishing between
Losses) or internally generated intangible assets and other intangible
– Revaluation Model (Fair Value – Subsequent Acc assets
Amortisation – Subsequent Imp Losses) Whether the useful lives are finite or indefinite
o Rules on Revaluation gains/losses Amortisation rates used for assets with finite lives
follow the guidance in IAS 16 Amortisation methods used for assets with finite lives
The gross carrying amount and the accumulated
amortisation at the beginning and end of the period and a So for example, €1m spent on a research project , and for which
reconciliation between the two a reliable fair value of €1.2m has been estimated by the
Details of revaluations purchasing company directors, can be recognised as an
Total amount of research and development expenditure intangible asset in the context of a business combination.
recognised as an expense during the period
Likewise, if a subsidiary has a “customer list” which could be
sold to other companies and the fair value of this “customer list”
IAS 38 & IFRS 3: can be reliably measured at €3m, then this too can be
Deals with Purchased Goodwill created when one business recognised as an intangible asset , but again, only in the context
acquires another and will be covered when studying of a business combination
consolidated accounts in Section 2 of the Syllabus
So, in summary, items can be recognised as intangible assets in a
business combination scenario, once they are “identifiable” and
Intangible Assets (other than Goodwill) Acquired as Part of have a “fair value which can be reliably measured”
Business Combination IFRS 3 Business Combinations and IAS 38
Intangible Assets addresses the recognition of separable
intangible assets.
Website Costs SIC 32 – Intangible Assets
Once an intangible asset of a Subsidiary is “identifiable” and has – Web Site Costs, states that an entity’s own website that arises
a reliable “fair value”, then it can be recognised as an Intangible from development and is for internal or external access is an
Asset on the acquisition of a Subsidiary.
FAR 1
F
FAR
internally developed intangible asset that is subject to the – Cost capable of being reliably measured
requirements of IAS 38