IAS 38

Intangible assets
subjects ： FA
Definition

'an identifiable non-

monetary asset without physical substance'
recognition criteria

it is a resource controlled by the entity as a result of past events from

• which the entity expects to derive future economic benefits
• it is identifiable
• it should be capable of reliable measurement

Eg- Patent,copy right , customer list, Goodwill

Measurement of intangible
assets
Initial recognition and measurement

• 'an intangible asset shall be measured initially at cost'

Subsequent
measurement
If the cost model - its cost, less any accumulated amortisation and any
• accumulated impairment losses
• For the valuation model to be applied, 'fair value should be measured
by reference to an active market'
Development costs are internally generated intangible assets which are
 capitalised if some crietiria are met

Research and development

Research -'original and planned investigation undertaken with the

prospect of gaining new scientific or technical knowledge and
• understanding'

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
Accounting treatment

Research

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

profit or loss as it is incurred.
• Any capital expenditure on research equipment (property, plant and
equipment) should be capitalised and depreciated as normal in
accordance with IAS 16
Development costs
 development costs must be capitalised as an intangible asset if they
meet the definition of an intangible asset and also meet the recognition
criteria.
• Probable inflow of economic benefit
• 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
• Expected to be profitable

the above criteria are not met, development expenditure must be written
 off to the statement of profit or loss as it is incurred.
Thank you for
listening