Intangible assets - IAS 38
The nature of intangible assets:
• Non-current assets.
Intangible assets and IAS 38:
• Standard used to account for intangible assets: IAS 38
• Objective of IAS 38:
o Prescribe the accounting treatment for intangible assets.
o Recognise intangible assets only if certain criteria are met.
o How to measure the carrying amount of intangible assets.
o Specify the disclosure of intangible assets.
Scope of IAS 38:
• Applied to the accounting for intangible assets except when another standard
requires different treatment.
• Scope exclusions:
o Intangible assets held for sale in the ordinary course of business.
• Inventory
o Financial assets - IFRS 9 (trade receivables).
Definition of an intangible asset:
1. Identifiable
2. Non-monetary Asset
3. Without physical substance
Intangible assets and the conceptual framework:
• Asset: present economic resource controlled by the entity as a result of past events.
• An item first needs to meet the definition of an asset per the CF before we can look
at the intangible asset definition.
Intangible assets and IAS 1 classification:
Per the requirements of IAS 1 an asset is considered to be current if:
• It expected to realise the asset or intends to consume it in the normal operating
cycle.
• Holds the asset for the purpose of trading.
• Expects to realise the asset within 12 months after the reporting period.
• The asset is a cash or cash equivalent.
, • All other - non current.
Intangibles and the asset definition:
1. Present economic resource
2. Controlled by the entity
3. As a result of past events
Components of the intangible asset definition:
Identifiable:
• Separable => can be sold separately
• Arises from contractual rights => the right is specified in a contract or agreement.
Non-monetary:
• Not money held or an asset that we will receive in fixed or determinable amounts of
money.
Without physical substance:
• You cannot see or touch this asset.
Characteristics of intangible assets:
• An asset will only meet the definition of an intangible asset if:
o The asset is identifiable
o The entity controls the asset
o Future economic benefits will flow from the item.
Control:
• Power to obtain future economic benefits flowing from the item.
• Can restrict others from accessing the future economic benefits.
• Control often arising from a legal right.
Future economic benefits:
• Examples of future economic benefits:
o Revenue from the sale of goods or services
o Cost savings
When can intangible assets be recognised?
• An intangible asset shall be recognised if, and only if:
o It is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity and
o The cost of the asset can be measured reliably.
The nature of intangible assets:
• Non-current assets.
Intangible assets and IAS 38:
• Standard used to account for intangible assets: IAS 38
• Objective of IAS 38:
o Prescribe the accounting treatment for intangible assets.
o Recognise intangible assets only if certain criteria are met.
o How to measure the carrying amount of intangible assets.
o Specify the disclosure of intangible assets.
Scope of IAS 38:
• Applied to the accounting for intangible assets except when another standard
requires different treatment.
• Scope exclusions:
o Intangible assets held for sale in the ordinary course of business.
• Inventory
o Financial assets - IFRS 9 (trade receivables).
Definition of an intangible asset:
1. Identifiable
2. Non-monetary Asset
3. Without physical substance
Intangible assets and the conceptual framework:
• Asset: present economic resource controlled by the entity as a result of past events.
• An item first needs to meet the definition of an asset per the CF before we can look
at the intangible asset definition.
Intangible assets and IAS 1 classification:
Per the requirements of IAS 1 an asset is considered to be current if:
• It expected to realise the asset or intends to consume it in the normal operating
cycle.
• Holds the asset for the purpose of trading.
• Expects to realise the asset within 12 months after the reporting period.
• The asset is a cash or cash equivalent.
, • All other - non current.
Intangibles and the asset definition:
1. Present economic resource
2. Controlled by the entity
3. As a result of past events
Components of the intangible asset definition:
Identifiable:
• Separable => can be sold separately
• Arises from contractual rights => the right is specified in a contract or agreement.
Non-monetary:
• Not money held or an asset that we will receive in fixed or determinable amounts of
money.
Without physical substance:
• You cannot see or touch this asset.
Characteristics of intangible assets:
• An asset will only meet the definition of an intangible asset if:
o The asset is identifiable
o The entity controls the asset
o Future economic benefits will flow from the item.
Control:
• Power to obtain future economic benefits flowing from the item.
• Can restrict others from accessing the future economic benefits.
• Control often arising from a legal right.
Future economic benefits:
• Examples of future economic benefits:
o Revenue from the sale of goods or services
o Cost savings
When can intangible assets be recognised?
• An intangible asset shall be recognised if, and only if:
o It is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity and
o The cost of the asset can be measured reliably.
