PAS 38 INTANGIBLE ASSETS

I. NATURE
PAS 38 applies to all intangible assets except those that are specifically dealt with
under other standards.
PAS 38 does not apply to goodwill acquired in a business combination (PFRS 3),
intangible assets held as inventory (PAS 2), and intangible assets classified as held for
sale (PFRS 5).
PAS 38 requires annual review of amortization method and the assessments and
estimates of useful life and residual value to each year-end. Any change is accounted
for as a change in accounting estimate.
An intangible asset is derecognized when it is disposed of or when no future economic
benefits are expected from it.

II. RECOGNITION
An intangible asset is recognized when it meets the definition of an intangible asset as
well as the asset recognition criteria of “probable future economic benefits” and “reliable
measurement of cost”.
Amortization is recognized as expense in profit or loss statement unless it is included in
the cost of producing another asset.

III. MEASUREMENT
Initial Measurement:
Intangible assets are initially measured at cost.
The measurement of cost depends on how the intangible asset is acquired. Intangible
assets may be acquired through:
a. Separation acquisition;
b. Acquisition as part of a business combination;
c. Acquisition by way of a government grant;
d. Exchanges of assets; or
e. Internal generation
Subsequent Measurement:
After initial recognition, an entity chooses either the cost model or the revaluation
model as its accounting policy and applies that policy to an entire class of intangible
assets.
COST MODEL REVALUATION MODEL
The intangible asset is carried at its cost The intangible asset is carried at its fair
less any accumulated amortization and value at the date of the revaluation less
any accumulated impairment losses. any subsequent accumulated
depreciation and subsequent
accumulated impairment losses.
Intangible assets, such as brand, newspaper mastheads, music and film publishing
rights, patents or trademarks, with no active market because those assets are
individually unique are measured under the cost model.

IV. PRESENTATION
Intangible assets accounted for PAS 38 are presented separately from goodwill. Such
intangible assets are aggregated and presented as one line item under the heading
“Intangible assets” or “Other intangible assets” in the statement of financial position.
The breakdown of the line item is disclosed in the notes.
Goodwill is presented separately under line item described as “Goodwill”.

V. DISCLOSURE

a. Whether the useful lives are indefinite or finite and, if finite, the useful lives or the
amortization rates used;
b. Amortization methods used;
c. Gross carrying amount and any accumulated amortization (aggregated with
accumulated impairment losses) at the beginning and end of the period;
d. The line item(s) of the statement of comprehensive income in which any
amortization of intangible assets is included;
e. A reconciliation of the carrying amount at the beginning and end of the period
showing increases and decreases to intangible assets and related accumulated
amortization and accumulated impairment losses.
f. Changes in accounting estimates in accordance with PAS 8.
g. Intangible assets assessed as having indefinite useful lives and reasons
supporting the assessments.
h. Intangible assets acquired by way of government grant and initially recognized at
fair value
i. Any restriction on the title to intangible assets (e.g., pledges of intangible assets)
j. Contractual commitments to acquire intangible assets.
k. Revaluation surplus recognized on revalued intangible assets and the methods
and assumptions used in estimating fair value of intangible assets.
l. Aggregate amount of research and development expenditure recognized as an
expense during the period.
m. The following and encouraged, but not required, disclosures:
i. Description of any fully amortized intangible asset that is still in use; and
ii. Brief description of significant intangible assets controlled by the entity but
not recognized as assets because they did not meet the recognition
criteria.