Intangible

assets
 Research
• original and planned investigation undertaken with the prospect of
gaining new scientific or technical knowledge and understanding.

• All research expenditure should be written off to the statement of

profit or loss as it is incurred.
 Non current assets

Tangible non current assets Intangible non current assets

• Normally have physical substance. • Do not normally have physical

• Cost of the asset are capitalised. substance. (identifiable non monetary
asset without physical substance)
• Depreciation
• Purchased asset are capitalised.
Generally internally generated are not
capitalised.
• Amortisation
 Development
• The application of research findings or other knowledge to a plan or
design for the production of new or substantially improved materials,
devices, products, processes, systems or services before the start of
commercial production or use.

• Development costs must be capitalised as an intangible asset if they meet

the definition of an intangible asset and also meet the recognition criteria.

• If the recognition criteria are not met, development expenditure must be

written off to the statement of profit or loss as it is incurred.
 Recognition criteria
• Probable inflow of economic benefit from the asset, whether through
sales or internal cost savings
• Intention to complete the asset and to use it or sell it
• Reliable measurement of development costs
• Adequate financial and other resources to complete the project
• Technical feasibility to complete the asset, so that it will be available
for use or sale
• Expected to be profitable, the costs of the project will be exceeded
by the benefits generated.