Professional Documents
Culture Documents
Intangible Assets
http://www.cc.cec/budg/
Overview of session
2. Recognition
3. Measurement
4. Disclosures
6. Questions
2
Intangible Assets
4
Key definitions
5
Scope
– Financial assets
6
Intangible Assets
2. Recognition
Criteria for recognition
No
No Yes
Yes No
5. Cost reliably
1. Identifiable? measured?
Yes No
Intangible Yes
Not
resource Recognised recognised
8
Identifiable
9
Control
10
Future economic benefits
11
Measurement of cost
12
Recognition – Internally
generated intangible assets
Internally
Internally
generated
generated goodwill
intangible assets
Research Development
NO! phase phase
Only if strict
NO! criteria met
13
Research phase
– The search for, and evaluation and final selection of, applications
of research findings or other knowledge
14
Development phase
15
Cannot capitalise…
Internally
generated Mastheads
brands
Publishing Customer
titles lists
16
Date for recognition
17
Intangible Assets
3. Measurement
Measurement
The E.C.s’
choice
19
Cost of internally generated
intangible assets
– Training activities
– Advertising/promotional activities
– Re-locating/re-organising costs
20
Measurement -
amortisation
Evidence must
Presumption Rebuttal be persuasive
Disclose
evidence
UEL ≤ 20 years UEL > 20 years & perform
annual
impairment test
Amortise over UEL
21
Measurement –
disposal
• Disposal
– Gain/loss = Net Disposal Proceeds – Carrying Amount
22
Intangible Assets
4. Disclosures
Major disclosures
24
Intangible Assets
Software are stated at historical cost less depreciation. Costs associated with maintaining computer software programmes are recognized as an expense as
incurred.
Expenditure, which enhances or extends the performance of computer software programmes beyond their original specifications is recognized as a capital
Computer software recognized as assets are amortized using the straight-line method over their useful lives, not exceeding a period of 4 years.
Research expenditure is recognized as an expense as incurred. Costs incurred on development projects are recognized as intangible assets when it is probable
that the project will be a success considering its commercial and technological feasibility, and only if the cost can be measured reliably. Other development
expenditures are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a
subsequent period. Development costs that have been capitalized are amortized from the commencement of the commercial production of the product on a
straight-line basis over the period of its expected benefit, not exceeding five years.
Expenditure to acquire patents, trademarks and licenses is capitalized and amortized using the straight-line method over their useful lives, but not exceeding 20
years.
26
Compliance issues
Amortisation rules Full year from the Pro-rata temporis from the date
date when the asset when the asset is available for
is available for use use
27
Intangible Assets
6. Questions
http://www.cc.cec/budg/