Intangible Assets (PAS 38)

Intangible Assets are assets that are:

1. Without physical substance
2. Non-monetary asset
3. Identifiable

Inclusions in intangible asset:

1. Patent 6. Computer Software 11. Mastheads
2. Franchise 7. Website 12. Secret Formula
3. Trademark 8. Goodwill 13. Secret Recipe
4. Copyright 9. Customer List 14. Production Backlogs
5. License 10. Brands

Exception:

Patent
Franchise
Trademark Always Intangible Asset
Copyright
License
Computer Software If integral part of the machine – Not intangible
If not integral part of the machine – Intangible
Website If solely for advertisement – Not intangible
If not solely for advertisement – Intangible
Goodwill Internally Generated
Customer List (Research and Development)
Brands - Not intangible
Mastheads
Secret Formula Externally Generated
Secret Recipe (Purchase from outside)
Production Backlogs - Intangible
Keywords to remember in inclusion and exclusion of Research and Development:

Include Exclude
New knowledge Production
Search Periodic/Seasonal/Routine
Design Customer
Research Product
Prototype

PPE used in Research and Development:

With alternative use – Research and Development is equal to depreciation
Without alternative use – Research and Development is equal to the whole cost of PPE

Initial Measurement of Intangible Assets:

Externally Generated – Same rule as PPE
Internally Generated –
1. Patent

Legal Fees in filing the Patent PXX

Fees paid to government patent office XX
Drawing fees to the patent office XX
Initial cost of Patent (Registration only) XX

2. Trademark and Copyright

Research and Development after technical PXX

feasibility
Registration Cost XX
Initial cost of Trademark and Patent XX

3. Computer Software

Cost of coding and testing after technical PXX

feasibility
Cost of production master XX
Cost of installation for internal use XX
Initial cost of Computer Software XX

4. Website

Application and infrastructure development PXX

Graphical Design XX
Content Development XX
Initial cost of Website XX
Amortization of Intangible Assets:
1. Cost Model

Initial Cost PXX

Less: Accumulated Amortization (XX)
Accumulated Impairment Loss (XX)
Carrying Amount XX

2. Revaluation Model

Fair Value PXX

Less: Accumulated Amortization (XX)
Accumulated Impairment Loss (XX)
Carrying Amount XX

Rules on Amortization:
Infinite Life – No Amortization
Finite Life – With Amortization
Software – Pattern of benefit (Same as output method)
Non-Software – Straight Line Method
Impairment Loss of Intangible Asset:

Cost PXX
Less: Accumulated Amortization (XX)
Carrying Amount @ Impairment XX
Less: Recoverable Amount (XX)
Impairment Loss XX
Other expenses related to intangible asset:

Franchise Other non-intangible asset

Amortization Expense Amortization Expense
Impairment Loss Impairment Loss
Interest Expense on Notes Successful and Unsuccessful cost of defense
Continuing Franchise Fee Research and Development before technical
feasibility