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1、IAS 38 Intangible assetsDefinitionDefinitionAn intangible asset is an identifiable non-monetary asset without physical substance. The asset must be:a)b)Controlled by the entity as a result of events in the pastSomething from which the entity expects future economic benefits to flowExamples of items

2、that might be considered as intangible assets include computer software, patents, copyrights, motion picture films, customer lists, franchises and fishing rights.Intangible asset: must be identifiableIf an intangible asset is acquired separately through purchase, there may be a transfer of a legal r

3、ight that would help to make an asset identifiable.Ex1Darbys accounting assistant has read something which states that intangible assets are identifiable, non-monetary items without physical substance.Which TWO of the following relate to items being classed as identifiable?A.B.C.D.Items must have pr

4、obable future economic benefits Items must arise from legal or contractual rights Items must have a measurable costItems must be separableEx1AnswerB, DWhilst items A and D are necessary for an item to be capitalised as an asset, they are not linked to the characteristic of them being identifiable.In

5、tangible asset: control by the entitya)Control over technical knowledge or know-how only exists if it is protected by a legal right.The skill of employees, arising out of the benefits of training costs, are most unlikely to be recognisable as an intangible asset, because an entity does not control t

6、he future actions of its staff.Similarly, market share and customer loyalty cannot normally be intangible assets, since an entity cannot control the actions of its customersb)c)Ex2Which TWO of the following factors is a reason why key staff cannot be capitalised as an intangible asset by an entity?A

7、.B.C.D.They do not provide expected future economic benefits They cannot be controlled by an entityTheir value cannot be measured reliablyThey are not separable from the business as a wholeEx2Answer B,CKey staff cannot be capitalised as firstly they are not controlled by an entity. Secondly, the val

8、ue that one member of key staff contributes to an entity cannot be measured reliably.Intangible asset: expected future economic benefitsAn item can only be recognised as an intangible asset if economic benefits are expected to flow in the future from ownership of the asset. Economic benefits may com

9、e from the sale of products or services, or from a reduction in expenditures (cost savings).2015/06 - Q2Which of the following statements relating to intangible assets is true?A.All intangible assets must be carried at amortised cost or at an impaired amount; they cannot be revalued upwardsThe devel

10、opment of a new process which is not expected to increase sales revenues may still be recognised as an intangible assetExpenditure on the prototype of a new engine cannot be classified as an intangible asset because the prototype has been assembled and has physical substanceImpairment losses for a c

11、ash generating unit are first applied to goodwill and then to other intangible assets before being applied to tangible assetsB.C.D.RecognitionAn intangible asset, when recognised initially, must be measured at cost. It should be recognised if, and only if both the following occur.a) It is probable t

12、hat the future economic benefits that are attributable to the asset will flow to the entity.b) The cost can be measured reliably.Management has to exercise its judgement in assessing the degree of certainty attached to the flow of economic benefits to the entity. External evidence is best.a)If an in

13、tangible asset is acquired separately, its cost can usually be measured reliably as its purchase price (including incidental costs of purchase such as legal fees, and any costs incurred in getting the asset ready for use).When an intangible asset is acquired as part of a business combination (ie an

14、acquisition or takeover), the cost of the intangible asset is its fair value at the date of the acquisition.b)internally generated intangibleassetsThe standard prohibits the recognition of internally generated brands, publishing titles and customer lists and similar items as intangible assets.Recogn

15、ition R&DResearch and development costsResearch costs should therefore be written off as an expense as they are incurred.In contrast with research costs development costs are incurred at a later stage in a project, and the probability of success should be more apparent.Development costs can be recog

16、nised as an asset if they meet certain criteria.DevelopmentDevelopment costs may qualify for recognition as intangible assets provided that the following strict criteria can be demonstrated.a)The technical feasibility of completing the intangible asset so that it will be available for use or saleIts

17、 intention to complete the intangible asset and use or sell it Its ability to use or sell the intangible assetHow the intangible asset will generate probable future economic benefits. The entity should demonstrate the existence of a market for the output of the intangible asset or the intangible ass

18、et itselfIts ability to measure the expenditure attributable to the intangible asset during its development reliablyb)c)d)e)Ex3Which of the following CANNOT be recognised as an intangible non-current asset in GHKs consolidated statement of financial position at 30 September 20X1?A.GHK spent $132,000

19、 developing a new type of product. In June 20X1 management worried that it would be too expensive to fund. The finances to complete the project came from a cash injection from a benefactor received in November 20X1.GHK purchased a subsidiary during the year. During the fair value exercise, it was fo

20、und that the subsidiary had a brand name with an estimated value of $50,000, but was not recognised by the subsidiary as it was internally generated.GHK purchased a brand name from a competitor on 1 November 20X0, for$65,000.GHK spent $21,000 during the year on the development of a new product, afte

21、r management concluded it would be viable in November 20X0. The product isbeing launched on the market on 1 December 20X1 and is expected to be profitable.B.C.D.Ex3Answer AThe finance was only available after the year end. Therefore the criteria of recognising an asset were not met, as the resources

22、 were not available to complete theproject.Even though the brand is internally generated in the subsidiarys accounts, it can be recognised at fair value for the group. Item C can be recognised as a purchased intangible and item D meets the criteria for being capitalised has development costs.Ex4Whic

23、h of the following could be classified as development expenditure in Ms statement of financial position as at 31 March 20Y0 according to IAS 38 Intangible Assets?$120,000 spent on developing a prototype and testing a new type of propulsion system. The project needs further work on it as the system i

24、s currently not viable.A payment of $50,000 to a local universitys engineering faculty to research new environmentally friendly building techniques.$35,000 developing an electric bicycle. This is near completion and the product will be launched soon. As this project is first of its kind it is expect

25、ed to make a loss.$65,000 developing a special type of new packaging for a new energy efficient light bulb. The packaging is expected to reduce Ms distribution costs by $35,000 a year.A.B.C.D.Ex4Answer DItem A cannot be capitalised because it does not meet all the criteria,i.e. it is not viable.Item

26、 B is research and cannot be capitalised.Item C cannot be capitalised because it does not meet all the criteria,i.e. making a loss.MeasurementMeasurement of intangible assets subsequent toinitialrecognitionThe standard allows two methods of valuation for intangible assets after they have been first

27、recognised.Applying the cost model, an intangible asset should be carried at its cost, less any accumulated amortisation and less any accumulated impairment losses.The revaluation model allows an intangible asset to be carried at a revalued amount, which is its fair value at the date of revaluation,

28、 less any subsequent accumulated amortisation and any subsequent accumulated impairment losses.revaluation modela)The fair value must be able to be measured reliably with reference to an active market in that type of asset.The entire class of intangible assets of that type must be revalued at the sa

29、me time (to prevent selective revaluations).If an intangible asset in a class of revalued intangible assets cannot be revalued because there is no active market for this asset, the asset should be carried at its cost less any accumulated amortisation and impairment losses.Revaluations should be made

30、 with such regularity that the carrying amount does not differ from that which would be determined using fair value at the end of the reporting period.b)c)d)Useful lifeAn entity should assess the useful life of an intangible asset, which may be finite or indefinite. An intangible asset has an indefi

31、nite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.Finite - amortisation methodAn intangible asset with a finite useful life should be amortised over its expected useful life.The residual value of an intangib

32、le asset with a finite useful life is assumed to be zero unless a third party is committed to buying the intangible asset at the end of its useful life or unless there is an active market for that type of asset (so that its expected residual value can be measured) and it is probable that there will

33、be a market for the asset at the end of its useful life.The amortisation period and the amortisation method used for an intangible asset with a finite useful life should be reviewed at each financial year-end.Intangible assets with indefinite useful livesAn intangible asset with an indefinite useful

34、 life should not be amortised. (IAS 36 requires that such an asset is tested for impairment at least annually.)The useful life of an intangible asset that is not being amortised should be reviewed each year to determine whether it is still appropriate to assess its useful life as indefiniteReassessi

35、ng the useful life of an intangible asset as finite rather than indefinite is an indicator that the asset may be impaired and therefore it should be tested for impairment.Ex5Amco Co carries out research and development. In the year ended 30 June 20X5, Amco incurred costs in relation to project X of $750,000. These were incurred at the same amount each month up to 30 April 20X