Professional Documents
Culture Documents
Notes Accounting
Notes Accounting
Notes Accounting
Chapter 36
Definition:
physical substance.
PAS 38 states further that the intangible asset must be CONTROLLED by the entity as a
RESULT of a PAST EVENT and from which FUTURE ECONOMIC BENEFITS are
1. Identifiability
2. Control
1. It is SEPARABLE – the entity can sell, transfer, have it licensed, rented or exchanged
CONTROL
Is the power of the entity to obtain the future economic benefits flowing from the
The entity must be able to ENJOY THE FUTURE ECONOMIC BENEIFTS from the asset and
Control is an offshoot of legal rights enforceable in a court of law – legal right as a matter of
Another method of control aside from legal right is – keeping something secret through
employee confidentiality
Benefits of training costs (employee training) cannot be treated as intangible because the
entity cannot control the action of the employees; similarly market share/customer loyalty
cannot also be classified as intangible assets because the entity cannot control customers
Include revenue from the sale of products/services, cost savings or other benefits
It is PROBABLE that future economic benefits attributable to the asset will flow to the
1. Separate acquisition
4. Acquisition by exchange
Purchase price
Directly attributable costs of preparing the asset for the intended use
1. Costs of employee benefits arising directly from bringing the asset to its working
condition
2. Professional fees arising directly from bringing the asset to its working condition
Airport land rights; License to operate radio or television stations; Import license or
plus any expenditure directly attributable to preparing the asset for intended use
Acquisition by Exchange
The cost of the intangible asset is measured at FAIR VALUE of the ASSET GIVEN UP plus ANY
If EXCHANGE lacks commercial substance, the intangible asset is measured at the CARRYING
An Exchange transaction lacks commercial substance when: THE CASH FLOW OF THE ASSET
RECEIVED DO NOT DIFFER SIGNIFICANTLY from the cash flows of the asset transferred.
ATTIBUTABLE COSTS NECESSARY to create, produce and prepare the asset to be capable of
o Cost of materials and services used or consumed in generating the intangible asset
o Costs of employee benefits arising from the generation of the intangible asset
o Amortization of patents and licenses that are used to generate intangible asset
Expenditures on intangible assets that DO NOT meet the recognition criteria for an
intangible asset shall be EXPENSED WHEN INCURRED; ie: Start up Costs; Training costs;
It is acquired through purchase, there is a transfer of legal right that would it identifiable
Examples:
1. Patent
2. Copyright
3. Franchise
4. Trademark or brandname
5. Customer list
6. Computer software
Example: GOODWILL
1. Intangible Assets with DEFINITE LIFE – include: patent; copyright; franchise with fixed term;
2. Intangible Assets with INDEFINITE LIFE – Goodwill; Trademark and perpetual franchise
1. COST MODEL – Cost less any accumulated amortization and any accumulated