IAS 38:
Intangible
Assets
, De ning Intangible (non-current) Assets:
STEP 1 - Must meet de nition of Asset as per the
conceptual framework
An asset is a present economic resource that the entity has
control over, based on a past event.
- Present economic resource entails that the item must not
have a low probability of bringing an in ow of economic
bene ts into the entity.
- Past event is the date that item was acquired.
STEP 2 – Must meet the recognition criteria of an Asset as
per conceptual framework
Once the de nition of an asset is met, the asset may be
recognised :
- Faithful representation
o No measurement uncertainty.
▪ Describe the cost.
- Relevant
o Probability of an in ow of economic bene ts is not
low.
o No uncertainty regarding existence (must be real/
exist)
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, STEP 3 – Must meet the de nition of an Intangible Asset as
per IAS 38
An Intangible Asset is an identi able non-monetary asset
without physical substance.
- Identi able: item is separable (can be sold separately
from the entity) and arises from contractual or legal
rights (the right is speci ed in a contract or agreement.
- Non-monetary: not money held or an asset that we will
receive in xed or determinable amounts of money (i.e.
Trade Receivables and Bank)
- Without physical substance: you cannot see or touch the
asset.
An asset will only meet the de nition of an intangible asset if
the following characteristics are met:
- The asset is identi able
- The entity controls the asset
o Power to obtain future economic bene ts owing
from that item
o Can restrict others from accessing the future
economic bene ts
o Often arises from a legal right
- Future economic bene ts will ow from the item
o Revenue
o Cost savings
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Intangible
Assets
, De ning Intangible (non-current) Assets:
STEP 1 - Must meet de nition of Asset as per the
conceptual framework
An asset is a present economic resource that the entity has
control over, based on a past event.
- Present economic resource entails that the item must not
have a low probability of bringing an in ow of economic
bene ts into the entity.
- Past event is the date that item was acquired.
STEP 2 – Must meet the recognition criteria of an Asset as
per conceptual framework
Once the de nition of an asset is met, the asset may be
recognised :
- Faithful representation
o No measurement uncertainty.
▪ Describe the cost.
- Relevant
o Probability of an in ow of economic bene ts is not
low.
o No uncertainty regarding existence (must be real/
exist)
fi fi fi fl fi fl fi
, STEP 3 – Must meet the de nition of an Intangible Asset as
per IAS 38
An Intangible Asset is an identi able non-monetary asset
without physical substance.
- Identi able: item is separable (can be sold separately
from the entity) and arises from contractual or legal
rights (the right is speci ed in a contract or agreement.
- Non-monetary: not money held or an asset that we will
receive in xed or determinable amounts of money (i.e.
Trade Receivables and Bank)
- Without physical substance: you cannot see or touch the
asset.
An asset will only meet the de nition of an intangible asset if
the following characteristics are met:
- The asset is identi able
- The entity controls the asset
o Power to obtain future economic bene ts owing
from that item
o Can restrict others from accessing the future
economic bene ts
o Often arises from a legal right
- Future economic bene ts will ow from the item
o Revenue
o Cost savings
fi fi fi fi fi
fi fi fifl fi fl
