IAS 38 Intangible Assets

This is a post of my own detailed and thorough explanation on the standards of the subject I'm taking, P2 Corporate Reporting (ACCA)

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IAS 38 Intangible Assets
Intangible assets is a non-monetary assets without a physical substance.
There are 4 recognition criteria.

• Asset must be able to be separately identifiable.
• Asset have the power to obtain/control the use of the intangible asset.
• All assets must be able to generate future economic benefits.
• The costs can be reliably measured.

Research cost

It is to be written off as expenses because it cannot generate future economic benefits.

Development cost

The intangible asset can only be capitalized if the five conditions are met. Besides, the cost capitalized cannot be more than the future economic benefit. Once the cost is written off, it cannot be recapitalized at a later date. 

Revaluation

Intangible asset can be revalued but only in an active market. It means there must be many willing buyer and seller for the intangible asset. 

Accounting Treatment
1. Intangible asset is purchased

• Criteria met
• - recognized cost initially 
• - subsequently at the end of the year, if the intangible assets has a finite useful life then it will be amortized over the useful life. Meanwhile, if the asset has an indefinite useful life, no amortization is required but yearly impairment review is needed when the carrying amount declines. 
• Criteria not met
• - written off as expenses

2. Intangible asset acquired as part of business combination

• The asset which can be separately identified will be recognized at fair value on date of acquisition.
• The one cannot be separately identifiable will be recognized as part of goodwill.

Ends,