intangible assets

PAS 38 “Intangible asset is an identifiable non- a. Intangible assets

monetary asset without physical substance” b. Goodwill
c. In-process Research and Dev`t Project
Identifiability *Acquirer recognizes intangible assets from acquiree
Exception: Goodwill arising from a business irrespective of whether recognized by the acquiree.
combination is recog as unidentifiable intangible Illustration:
asset Jollibee purchased the net assets of Mang Inasal for 100
a. Either is separable 000. The FV of Mang Inasal`s assets before the
“capable of being separated or divided acquisition as follows:
from the entity and sold, transferred, Inventory 10 000
licensed, rented or exchanged”
b. or arises from contractual or other legal Equipment 50 000

rights
Trademarks 15 000

Control over resource Research and

5 000
Dev`t
a. Legal rights
“in the absence of legal rights, it is more
difficult to demonstrate control. However, Way of a government grant
it is not a necessary condition for control” PAS 20, may choose between at:
b. Restraint of trade agreement a. Fair Value
c. Confidentiality b. Nominal amount plus directly attributable cost
to prepare the asset for is intended use
Existence of future economic benefit Illustration:
a. Revenue from sale of products or services Jollibee received a trademark from the national
b. Cost savings government with a fair value of 20 000. The company
c. Other benefits paid 10 000 to prepare the asset for its intended use.
Patent 30 Patent 10
“e.g purchase of a competitor`s patent to K K
remove competition” Income from Grant 20K or Cash 10
K
Cash 10K

measurement
Exchanges of assets
initial: at cost Intangible assets acquired in exchange for a non-
subsequent: either at cost model or revaluation monetary asset is measured at FV unless:
model a. Transaction lacks commercial substance
*transaction lacks commercial substance if
modes of acquisition future cash flows are not expected to change
Separate acquisition as a result of the transaction
a. Purchase price, including import duties and Cost is equal to:
non-refundable taxes, after deducting trading 1. FV of the asset given up +/- cash
discounts and rebates paid or received
b. Directly attributable cost of preparing the asset 2. FV of asset received
for its intended use 3. Carrying value of asset given up +/-
*if payment is deferred beyond normal credit terms, cost cash paid or received
is the cash price equivalent
Illustration: b. FV of neither net asset received nor asset
Jollibee purchased a patent for 100 000 and also paid given up is reliably measurable
the following: Illustration:
Jollibee exchanged its machinery and 2K cash for 5
VAT 5 000
patents. The machinery has a fair value and carrying
Brokers fee 15 000
amount of 20K and 15K, respectively. The patents have
Cost of
testing
8 000 a FV of 25 000.
Cost of
12 000
advertising
General OH 15 000
Internal generation
Part of business combination
Cost = FV at the date of acquisition
Intangible assets from business combination: