PFRS 10
The ability to use its power over the
Consolidated Financial Statements
Definition of terms (PFRS 10)
● Parent – an entity that controls one or
more entities.
● Subsidiary – an entity that is controlled
by another entity.
● Group – a parent and its subsidiaries.
● Consolidated financial statements – the
financial statements of a group in which
the assets, liabilities,equity, income,
expenses and cash flows of the parent
and its subsidiaries are presented as
those of a single economic entity.
Preparation of Consolidated FS
- A parent entity is required to present
consolidated financial statements,
except when all of the following
conditions are met:
a. The parent is a subsidiary of
another entity and all its other
owners do not object to the
parent not presenting
consolidated financial statements
b. The parent’s debt or equity
instruments are not traded in a
public market (or being
processed for such purpose);
and
c. The parent’s ultimate or any
intermediate parent produces
consolidated financial statements
that are available for public use
and comply with PFRSs.
Elements of Control
Control exists if the investor has all of the
following:
1. Power over the investee;
2. Exposure, or rights, to variable returns
from its involvement with the investee;
and
3.
investee to affect the amount of the
investor’s returns.
Accounting requirements
● Consolidated financial statements shall
be prepared using uniform accounting
policies.
● The financial statements of the parent
and its subsidiaries used in preparing
consolidated financial statements shall
have the same reporting dates. (The
maximum difference in reporting dates is
3 months.)
● Consolidation begins from the date the
investor obtains control of the investee
and ceases when the investor loses
control of the investee.
Measurement
- Income and expenses of the subsidiary are
based on the amounts of the assets and
liabilities recognized in the consolidated
financial statements at the acquisition date.
- Investments in subsidiaries are accounted for
in the parent’s separate financial statements
either:
a. at cost;
b. in accordance with PFRS 9 Financial
Instruments; or
c. using the equity method.
NCI in net assets of the subsidiary
● Non-controlling interests shall be
presented in the consolidated statement
 of financial position within equity,
separately from the equity of the owners
of the parent.
● Non-controlling interest in the net assets
consists of: The amount determined at
the acquisition date using PFRS 3; and
The NCI’s share of changes in equity
since the acquisition date.
NCI in profit or loss and comprehensive
income
- The profit or loss and each component of other
comprehensive income in the consolidated
statement of profit or loss and other
comprehensive income shall be attributed to the
following:
1. Owners of the parent
2. Non-controlling interests
Preparing the Consolidated financial
statements
- Consolidated financial statements are
prepared by combining the financial
statements of the parent and its
subsidiaries line by line by adding
together similar items of assets,
liabilities, equity, income and expenses.
Consolidation at date of acquisition
1. Eliminate the “Investment in subsidiary”
account. This requires:
a. Measuring the identifiable assets
acquired and liabilities assumed
in the business combination at
their acquisition-date fair values.
b. Recognizing the goodwill from
the business combination.
c. Eliminating the subsidiary’s
pre-combination equity accounts
and replacing them with the
non-controlling interest.
2. Add, line by line, similar items of assets
and liabilities of the
combining constituents.
PFRS 11
Joint Arrangements
Joint Arrangement - PFRS 11 defines a joint
arrangement as “an arrangement
of which two or more parties have joint control.”
Characteristics of a joint arrangement
1. The parties are bound by a contractual
arrangement.
2. The contractual arrangement gives two
or more of those parties joint control of
the arrangement.
● Joint control is “the contractually agreed
sharing of control of an arrangement,
which exists only when decisions about
the relevant activities require the
unanimous consent of the parties
sharing control.” (PFRS 11)
Types of Joint Arrangements
1. Joint operation – is a joint arrangement
whereby the parties that have joint
control of the arrangement have rights to
the assets and obligations for the
liabilities, relating to the arrangement.
Those parties are called joint operators.
2. Joint venture – is a joint arrangement
whereby the parties that have joint
control of the arrangement have rights to
the net assets of the arrangement.
Those parties are called joint venturers.
Joint operations
Financial reporting by joint operators
- A joint operator shall recognize in relation to its
interest in a joint operation:
1. its assets, including its share of any
assets held jointly;
2. its liabilities, including its share of any
liabilities incurred jointly;
3. its revenue from the sale of its share of
the output arising from the joint
operation;
 4. its share of the revenue from the sale of
the output by the joint operation; and
5. its expenses, including its share of any
expenses incurred jointly.
Accounting for joint operation transactions
- Separate accounting records may or
may not be required for the joint
operation itself and financial statements
may or may not be prepared for the joint
operation. However, the joint operators
may prepare management accounts so
that they may assess the performance of
the joint operation.
PFRS 12
Disclosure of Interest in Other Entities
Objective
- The objective of PFRS 12 is to prescribe
the minimum disclosure requirements for
an entity’s interests in other entities,
particularly (a) the nature of, and risks
associated with, those interests and (b)
the effects of those interests on the
entity’s financial statements.
Interest in another entity
- Interest in another entity – refers to
involvement that exposes an entity to
variability of returns from the
performance of another entity. It is
evidenced by the holding of equity or
debt instruments or other forms of
involvement, such as the provision of
funding, liquidity support, credit
enhancement and guarantees. It
includes the means by which an entity
obtains control, joint control, or
significant influence over another entity.
An entity does not necessarily have an
interest in another entity solely because
of a typical customer-supplier
relationship. (PFRS 12.Appendix A)
Scope
- PFRS 12 applies to entities that have an
interest in a(an):
a. Subsidiary;
b. Joint arrangement (i.e., Joint
operation or Joint venture);
c. Associate; or
d. Unconsolidated structured entity.
● PFRS 12 does not apply to an interest in
another entity that is accounted for in
accordance with PFRS 9 Financial
Instruments.
Minimum disclosures under PFRS 12
- Significant judgments and assumptions
in determining the existence of control,
joint control or significant influence over
 an investee or the type of a joint ● Current and noncurrent assets
arrangement. and liabilities
● Revenue and profit or loss
Minimum disclosures under PFRS 12 – ● Other comprehensive income
Cont’n. and Total comprehensive income
Interests in Subsidiaries
- The composition of the group. PFRS 13
● Name of subsidiary, its principal Fair Value Measurement
place of business, and country of
incorporation. Scope
● Interests or voting rights held by
PFRS 13 applies to the fair value
non-controlling interest (NCI).
measurement,
● Profit or loss allocated to NCI
during the period.
and related disclosures, of an asset, liability
● NCI in net assets as of the end of or
the period. equity when other PFRSs require
● Dividends paid to NCI. measurement
● Summary of the subsidiary’s at fair value or fair value less costs to sell.
assets, liabilities, profit or loss
and cash flows. Fair Value
Fair value is “the price that would be
- Significant restrictions on the entity’s received to sell
ability to access assets and settle
an asset or paid to transfer a liability in an
liabilities of the group.
orderly
- Changes in ownership interest that result
and do not result in a loss of control
transaction between market participants at
- Any difference in reporting period with the
the subsidiary. measurement date.” (PFRS 13)

Interests in Joint Arrangements and Fair Value Measurement

Associates (that are material) Fair value is based on the market price of
- Name of the joint arrangement or the asset in:
associate, its principal place of business, a. a principal market; or
and country of incorporation. b. the most advantageous market (in
- Nature of relationship.
the absence of a principal market)
- Ownership interest.
- Measurement of the investment (i.e.,
equity method or fair value).
- The fair value of the investment, if the
equity method is used and there is a
quoted market price for the investment.
- Dividends received from the joint venture
or associate.
- Summarized financial information about
the joint venture or associate which
includes the following:

PFRS 15
Revenue from Contracts with
Customers
Income vs. Revenue
The Conceptual Framework provides the
following definitions:
● Income – increases in economic
benefits during the accounting period
in the form of inflows or
enhancements of assets or
decreases of liabilities that result in
increases in equity, other than those
relating to contributions from equity
participants. Income encompasses
both revenue and gains.
● Revenue – income arising in the
course of an entity's ordinary
activities.
Applicability of PFRS 15
PFRS 15 shall be applied to contracts
wherein the counterparty
is a customer.
● Contract – An agreement between
two or more parties that creates
enforceable rights and obligations. A
contract can be
written, oral, or implied by an entity’s
customary business
practice.
● Customer – A party that has
contracted with an entity to obtain
goods or services that are an output
of the entity’s ordinary activities in
exchange for consideration.
Applicability of PFRS 15 (continuation)
PFRS 15 shall not be applied to the
following:
● Lease contracts (PAS 17 Leases);
● Insurance contracts (PFRS 4
Insurance Contracts);
● Financial instruments; and
● Non-monetary exchanges between
entities in the same line of business
to facilitate sales to customers. For
example, PFRS 15 is not applicable
to a contract between two oil
companies that agree to exchange oil
to fulfill customer demands in
different locations on a timely basis.
Core principle
An entity recognizes revenue to depict the
transfer of promised goods or services to
customers in an amount that reflects the
consideration to which the entity expects to
be entitled in exchange for those goods or
services.
Steps in the recognition of revenue
PFRS 15 requires the following steps in
recognizing revenue:
● Step 1: Identify the contract with the
customer
● Step 2: Identify the performance
obligations in the contract
● Step 3: Determine the transaction
price
 ● Step 4: Allocate the transaction price
to the performance obligations in the
contract
● Step 5: Recognize revenue when (or
as) the entity satisfies a performance
obligation
Step 1: Identify the contract with the
customer
Requirements before a contract with a
customer is accounted for under
PFRS 15:
a. The contract must be approved and
the contracting parties are
committed to it;
b. rights and payment terms are
identifiable;
c. The contract has commercial
substance; and
d. The consideration is probable of
collection.
No revenue is recognized if the contract
does not meet the criteria above. Any
consideration received is recognized as
liability.
Step 2: Identify the performance obligations
in the contract
Each promise in a contract to transfer a
distinct good or service is treated as a
separate performance obligation.
Identifying distinct goods or services
A good or service is distinct if:
(a) the customer can benefit from it,
either on its own or together with
other resources that are readily
available to the customer (e.g.,
(b) the good or service is regularly sold
separately); and the good or service
is separately identifiable (i.e., not
an input to a combined output, does
not significantly modify the other
promises, or not highly interrelated
with the other promises).
A good or service that is not distinct shall be
combined with the other promises in the
contract. Combined promises are treated as
a single performance obligation.
Step 3: Determine the transaction price
● The entity shall determine the
transaction price because this is the
amount at which revenue will be
measured.
● Transaction price is “the amount of
consideration to which an entity
expects to be entitled in exchange for
transferring promised goods or
services to a customer, excluding
amounts collected on behalf of third
parties (e.g., some sales taxes).” The
consideration may include fixed
amounts, variable amounts, or both.
Step 4: Allocate the transaction price to the
performance obligations
● The transaction price shall be
allocated to each performance
obligation identified in a contract
based on the relative stand-alone
prices of the distinct goods or
services promised to be transferred.
● The stand-alone selling price is the
price at which a promised good or
service can be sold separately to a
customer.
Estimating the stand-alone selling price
If the stand-alone selling price is not directly
observable, the entity shall estimate it using
one or a combination of the following
methods:
 ● Adjusted market assessment
approach – the entity evaluates the
market in which it sells goods or services
and estimates the price that a customer in
that market would be willing to pay for those
goods or services.
● Expected cost plus a margin
approach – the entity forecasts its
expected costs of satisfying a performance
obligation and then add an appropriate
margin for that good or service.
● Residual approach – the entity
estimates the stand-alone selling
price as the total transaction price
less the sum of the observable
stand-alone selling prices of other
goods or services promised in the
contract.
Step 5: Recognize revenue when (or as)
the entity satisfies a performance obligation
● A performance obligation is satisfied
when the control over a promised
good or service is transferred to the
customer.
● Revenue is measured at the amount
of the transaction price allocated to
the satisfied performance obligation.
● Performance obligations are
classified into the following:
1. Performance obligation that is
satisfied over time
2. Performance obligation that is
satisfied at a point in time
Performance obligations satisfied over
time
For a performance obligation that is
satisfied over time, revenue is recognized
over time AS the entity progresses towards
the complete satisfaction of the obligation.
A performance obligation is satisfied over
time if one of the following
criteria is met:
a. The customer simultaneously
receives and consumes the benefits
provided by the entity’s performance
as the entity performs.
b. The entity’s performance creates or
enhances an asset that the customer
controls as the asset is created or
enhanced.
c. The entity’s performance does not
create an asset with an alternative
use to the entity and the entity has an
enforceable right to payment for
performance completed to date.
Measuring progress towards complete
satisfaction of a performance obligation
● For each performance obligation
satisfied over time, an entity shall
recognize revenue over time by
measuring the progress towards
complete satisfaction of that
performance obligation.
● Examples of acceptable
measurement methods:
1. Output methods (e.g., surveys of
work performed)
2. Input methods (e.g., relationship
between costs incurred to date and
total expected costs)
If efforts or inputs are expended evenly
throughout the performance period, revenue
may be recognized on a straight-line
basis.
Cost-recovery Approach
● If the outcome of a performance
obligation cannot be reasonably
measured, revenue shall be
recognized only to the extent of
 costs incurred that are expected to
be recovered.
Performance obligations satisfied at a
point in time
● A performance obligation that is not
satisfied over time is presumed to be
satisfied at a point in time.
● For a performance obligation that is
satisfied at a point in time, revenue is
recognized WHEN the performance
● obligation is satisfied.
Contract costs
Contract costs include the following:
(a) Incremental costs of obtaining a
contract – recognized as assets if
they are recoverable and avoidable.
As a practical expedient, the costs
are recognized as expense if their
expected amortization period is 1
year or less
(b) Costs to fulfill a contract –if within the
scope of PFRS 15, they are
recognized as assets if they are: (a)
directly related to a contract, (b)
generate or enhance resources, and
(c) recoverable..
Presentation
A contract where either party has performed
is presented in the statement of financial
position as a contract liability, contract asset
or receivable.
● Contract liability – is an entity’s
obligation to transfer goods or
services to a customer for which the
entity has received consideration (or
the amount is due) from the
customer.
● Contract asset – is an entity’s right
to consideration in exchange for
goods or services that the entity has
transferred to a customer when that
right is conditioned on something
other than the passage of time.
● Receivable – is an entity’s right to
consideration that is unconditional.
PFRS 16 Leases
Identifying a lease
● “A contract is, or contains, a lease if
the contract conveys the right to
control the use of an identified asset
for a period of time in exchange for
consideration.” (PFRS 16.9)
Right to Control
An entity has the right to control the use of
an identified asset if it has both of the
following throughout the period of use:
1. the right to obtain substantially all
of the economic benefits from use
of the identified asset; and
2. the right to direct the use of the
identified asset.
Identified asset
● An asset can be identified by being
explicitly stated in the contract or by
being implicitly specified at the time
the asset is made available for use
by the customer.
● A portion of an asset can be
identified if it is physically distinct.
Substantive substitution rights
 ● A customer does not have the right to
use an identified asset if the supplier
has the substantive right to substitute
the asset throughout the period of
use.

● A supplier’s right to substitute an

asset is substantive if both of the
following conditions exist:
1. the supplier has the practical ability
to substitute alternative assets
throughout the period of use; and
2. the supplier would benefit
economically from the exercise of its
right to substitute the asset.

Right to direct the use Discount rate

The customer has the right to direct how
and for what purpose the asset is used
throughout the period of use
Accounting for leases by Lessee
GENERAL RECOGNITION
Lessee recognizes both:
1. Lease liability; and
2. Right-of-use asset
RECOGNITION EXEMPTION
(for ‘short-term” and ‘low value’ leases)
Lessee recognizes lease payments as
expense over the lease term using a
straight line basis, or another more
appropriate basis.
● Discount rate is the interest rate
implicit in the lease; if not
determinable, then the lessee’s
incremental borrowing rate.
Classification of lease by the lessor
1. Finance lease - a lease that
transfers substantially all the risks
and rewards incidental to ownership
of an asset. Title may or may not
eventually be transferred.
2. Operating lease - a lease other than
a finance lease.
Indicators of a finance lease
Accounting for Finance Leases by
Lessors
● Initial recognition
Lessors recognize assets from a finance
lease as receivable measured at an
amount equal to the net investment in the
lease.
Lease payments
1. Fixed payments, including
in-substance fixed payments, less
any lease incentives payable;
2. Variable lease payments that depend
on an index or a rate, initially
measured using the index or rate as
at the commencement date;
3. Guaranteed residual value;
4. The exercise price of a purchase
option if the lessee is reasonably
certain to exercise that option; and
5. Payments of penalties for terminating
the lease, if the lease term reflects
the lessee exercising an option to
terminate the lease.
Discount rate
The discount rate to be used in calculating
the present value of the lease payments is
the interest rate implicit in the lease.
Accounting for operating lease
● The accounting for operating leases
is straight-forward. The lessor
recognizes the lease payments as
rent income on a straight line
basis over the lease term, unless
another systematic basis is more
representative of the time pattern of
user’s benefit.
PAS 36
Impairment of Assets
Core Principle
If the carrying amount of an asset is greater
than its recoverable amount, the asset is
impaired. The excess is impairment loss.
Computation of Impairment loss
Recoverable amount xx
Less: Carrying amount (xx)
Impairment loss xx
Recoverable amount is the amount to be
recovered through use or sale of an asset. It
is the higher of an asset’s:
a. Fair value less costs of disposal, and
b. Value in use
Value in use is the present value of the
future cash flows expected to be derived
from an asset or cash-generating unit.
Identifying an asset that may be impaired
An entity shall assess at the end of each
reporting period whether there is any
indication that an asset may be impaired. If
any such indication exists, the entity shall
estimate the recoverable amount of the
asset.
If there is no indication that an asset may be
impaired, an entity is not required to
estimate the recoverable amount of the
asset.
Indications of impairment
I. External sources of information
a. Significant decline in the asset’s
value more than what is expected as
a result of passage of time of normal
use.
b. Significant changes in technological,
market, economic or legal
environment in which the entity
operates or in the market to which an
asset is dedicated.
c. Increase in market interest rates or
other market rates of return on
investments which are likely to affect
discount rates used in calculating
asset’s value in use and decrease
asset’s recoverable amount
materially.
d. Carrying amount of the net assets is
more than its market capitalization.
e.
II. Internal sources of information
a. Evidence of obsolescence or
physical damage
b. Significant change with adverse
effect to the entity has taken place or
will take place, which will affect
expected use of assets, e.g.,
discontinuance, disposal,
restructuring plans.
c. Evidence is available from internal
reporting that indicates that the
economic
Required testing for impairment
The following assets are required to be
tested for impairment at least annually,
whether or not there are indications for
impairment:
a. Intangible asset with indefinite useful
life
b. Intangible asset not yet available for
use
c. Goodwill acquired in a business
combination
Measuring recoverable amount
Recoverable amount is the higher of the
asset’s fair value less costs of disposal and
value in use.
However, if there is no reason to believe
that an asset’s value in use materially
exceeds its fair value less costs of disposal,
the asset’s fair value less costs of disposal
may be used as its recoverable amount.
This will often be the case for an asset that
is held for disposal.
Value in use
Value in use is the present value of the
future cash flows expected to be derived
from an asset or cash-generating unit.
a. Any residual value of the asset and
disposal costs should be included in
estimating future cash inflows and
outflows.
b. Cash flow projections shall cover a
maximum period of 5 years.
c. Projections beyond 5 years are
extrapolated.
d. The discount rate to be used shall be
a pre-tax rate
Recognizing and measuring an allocated to each of the acquirer’s CGU in
impairment loss the year of business combination.
Impairment loss is recognized in profit or
loss, unless the asset is carried at revalued Impairment loss for a CGU
amount, in which case revaluation surplus is The impairment loss on a CGU shall be
decreased first and any excess is allocated
recognized in profit or loss. The decrease in 1. First, to any goodwill allocated to the
the revaluation surplus is recognized in CGU
other comprehensive income. 2. Then, to the other assets of the unit
pro rata on the basis of the carrying
Depreciation after impairment amount of each asset in the unit.
After the recognition of an impairment loss,
the depreciation (amortization) charge for
the asset shall be adjusted in future periods
to allocate the asset’s revised carrying
amount, less its residual value (if any), on a
systematic basis over its remaining useful
life.

Cash-generating unit (CGU)

Cash-generating unit (CGU) is the smallest
identifiable group of assets that generates
cash inflows that are largely independent of
the cash inflows from other assets or groups
of assets.
PAS 38
Impairment of individual assets included Intangible Assets
in a CGU An intangible asset is an identifiable
Assets whose recoverable amount can be non-monetary asset
determined reliably are tested for without physical substance.
impairment individually.
Goodwill acquired in a business
Assets whose recoverable amount cannot combination is outside the scope of PAS 38
be determined reliably (e.gassets that do because it is unidentifiable. Goodwill is
not generate their own cash flows) are accounted for under PFRS 3 Business
included in a CGU. The CGU is the one Combinations and PAS 36 Impairment of
tested for impairment. Assets.

Allocating goodwill to CGU’s Essential criteria in the definition of

For purposes of impairment testing, goodwill intangible assets
acquired in a business combination shall be 1. Identifiability – separable or arises
from contractual rights
 2. Control – power to obtain (or restrict
others from obtaining) the economic
benefits from an asset.
3. Future economic benefits – may
include revenue from the sale of
products or services, cost savings, or
other benefits resulting from the use
of the asset by the entity.
Recognition
An intangible asset shall be recognized if
management can demonstrate that:
1. The item meets the definition of
intangible asset;
2. It is probable that the expected future
economic benefits will flow to the
entity; and
3. The cost of the asset can be
measured reliably.
Initial measurement
An intangible asset shall be measured
initially at cost. Measurement of cost
depends on how the intangible asset is
acquired. Intangible assets may be acquired
through:
1. Separate acquisition
2. Acquisition as part of a business
combination
3. Acquisition by way of a government
grant
4. Exchanges of assets
5. Internal generation
Separate acquisition
The cost of a separately acquired intangible
asset comprises:
1. Its purchase price, including import
duties and non-refundable purchase
taxes, after deducting trade discounts
and rebates; and
2. Any directly attributable cost of
preparing the asset for its intended
use.
Acquisition as part of a business
combination
The cost of intangible asset acquired in a
business combination is its fair value at the
acquisition date.
Acquisition by way of a government
grant
Intangible assets acquired by way of
government grant may
be recorded at either:
1. fair value
2. alternatively, at nominal amount or
zero, plus direct costs incurred in
preparing the asset for its intended
use
Exchanges of assets
If the exchange has commercial substance,
the intangible asset is initially recognized
using the following order of priority:
a. Fair value of the asset Given up
(Plus cash Paid or minus cash
received)
b. Fair value of the asset Received
c. Carrying amount of the asset Given
up (Plus cash Paid or minus cash
received)
If the exchange has lacks commercial
substance, the intangible asset is initially
recognized using (c) above.
An exchange transaction has a commercial
substance if the expected future cash flows
from the asset received significantly differ
from those of the asset given up.
Internally generated intangible assets
The costs of self-creating an intangible
asset are classified into:
a. Research costs – include costs of
searching new knowledge and
identifying and selecting possible
alternatives.
b. Development costs – include costs of
designing from selected alternative
and using knowledge gained from
research.
If an entity cannot identify in which phase a
cost is incurred, the cost is regarded as
incurred in research phase.
R&D Costs
1. Costs incurred in research phase are
expensed immediately.
2. Costs incurred in development phase
are expensed immediately, unless
they meet all of the following
conditions for capitalization:
(1) Technical feasibility,
(2) Intention to complete,
(3) Ability to use or sell,
(4) Probable economic benefits,
(5) Availability of adequate resources, and
(6) Measured reliably.
The following are not R&D expenses but
rather regular expenses.
a. Costs incurred during commercial
production:
1. Trouble-shooting during
commercial production
2. Periodic or routine design
changes to existing products
3. Modification of design for a
specific customer
4. Design, construction and
operation of plant that is
feasible for commercial
production
5. Engineering follow through in
an early phase of commercial
production
6. Quality control during
commercial production
b. Advertising and other marketing
expenses.
c. Training costs
(HINT: R&D expense relates to something
that is still in the process of being invented.
It does not relate to periodic changes to an
existing product . The following terms
generally indicate that a cost is not an R&D
expense:‘commercial,’‘customer,’‘advertisin
g’ and ‘market’.)
Items of PPE used in R&D activities
1. If the item of PPE can be used in
various R&D activities or other
purposes, the cost of the PPE is
capitalized and depreciated. The
amount of depreciation is included as
R&D expense.
2. If the item of PPE is can only be used
on one specific R&D project, the cost
of the PPE is expensed immediately
in its entirety as R&D expense.
Items not recognized as intangible
assets
The cost of internally generated brands,
mastheads, publishing titles, customer lists,
goodwill and items similar in substance are
expensed when incurred.
Subsequent expenditure
Subsequent expenditures on an intangible
asset are generally recognized as expense.
Reinstatement of costs in subsequent
period
Expenditure on an intangible item that was
initially recognized as an expense shall not
be recognized as part of the cost of an
intangible asset at a later date.

Measurement after recognition

After initial recognition, an entity shall
choose as its accounting policy either the
a. Cost model, or
b. Revaluation model – applicable only if the
intangible asset has an active market.

Amortization
1. Intangible assets with finite useful life
are amortized over the shorter of the
asset’s useful life and legal life.
2. Intangible assets with indefinite
useful life are not amortized but
tested for impairment at least
annually.
3. The default method of amortization is
the straight line method.
Final Quizzes
Quiz