4Intagible assets.docVIP

IAS 38 Intangible assets Definition of an intangible asset An intangible asset is an identifiable non-monetary asset without physical substance. The asset must be: controlled by the entity as a result of events in the past ,and something from which the entity expects future economic benefits to flow Research and development costs Development costs can be recognized as an asset if they meet certain criteria. Research activities by definition do not meet the criteria for recognition under IAS38.Research costs should therefore be written off as an expense as they are incurred. Example of research costs Activities aimed at obtaining new knowledge The search for, evaluation and final selection of, applications of research findings or other knowledge The search for alternatives for materials, devices, products, processes, systems or services The formulation, design evaluation and final selection of possible alternatives for new or improved material ,devices, products, systems or services In contrast with research costs development costs are incurred at a later stage in a project, and the probability of success should be more apparent. Example of development costs includes the following. The design, construction and testing of pre-production or pre-use prototypes and models The design of tools ,jig, moulds and dies involving new technology The design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production The design, construction and testing of a chosen alternative for new or improved materials ,devices, products ,process ,systems or services Cost of an internally generated intangible asset Intangible assets should be initially be measured at cost, but subsequently they can be carried at cost or at a revalued amount Measurement of intangible assets subsequent to initial recognition Applying the cost model, an intangible asset should be carried at its cost, less any accumulated amortization and less any accumul