IAS 38-Intangible Assets

Presented by:
Snehasish Barua, FCA
What is an intangible asset?
An intangible asset

 Has no physical substance

 It is identifiable – either separable or arises from a contractual

or legal right

 Should be recognized if there is a probable economic benefit

flowing to the entity as a result and it can be measured
reliably.
 Recognition and measurement

 If recognizing, should capitalize at cost

 It should be amortized if there is a UEL

 Impairment reviews should be performed if there is no UEL: if the

intangible is being amortized then impairment reviews should
only be done if there is some indication of impairment, if the
asset is not being amortized then impairment should be done
every year

 Can revalue if there is an active market

 Types of intangibles

 Acquired separately – recognize at cost

 Acquired with a business combination – if it can be identified separately

recognize at fair value otherwise include in goodwill.
Research and development
 Research – write off as an expense
immediately

Research and development:

Development – must capitalize if meet certain

criteria (PIRATE)
PIRATE

Profit made on project

Intention to use/sell product

Resources available to complete project

Ability to use/sell the product

Technically feasible

Expenditure is identifiable
 Test Your Knowledge

On 1 August 2016 Snowcap Co commenced work on a project to develop a new production

process. In the period to 31 December 2016 Snowcap incurred expenditure on the project of
Tk 280,000. The expenditure was incurred evenly over the period.

On 1 November 2016 an externally commissioned market research survey, costing Tk 40,000,

proved the new process had met the criteria to be recognized as an intangible asset.

During 2017 further expenditure on the project was Tk 480,000 incurred evenly over the
period.

At 31 December 2017, what will be the value of the intangibles in the statement of
financial position?
Question

Answer
Presenter’s contact details:

Snehasish Barua
FCA (ICAB), ACA (ICAEW)
Partner
Snehasish Mahmud & Co.
Chartered Accountants
+8801819319319
snehasish@smac-bd.com
www.smac-bd.com