Intangibles

When intangible assets are internally-generated, costs incurred in the research phase are

• Expensed immediately

• Capitalized

• Capitalized only to the extent of the limits provided under IAS 38 Intangible Assets

• Expensed or capitalized, as a matter of accounting policy and/or professional judgment

An entity may subsequently measure an intangible asset using the revaluation model

• At the option of the entity

• Only when the intangible asset has an indefinite useful life

• Only when an active market exists for that intangible asset

• At no circumstances

All of the following are considered research and development activities, except:

• Activities aimed at obtaining new knowledge

• Design of tools, jigs, molds and dies involving new technology

• Routine on-going effort to refine, enrich or improve quality of an existing product

• Search for, evaluation and final selection of, applications of research findings or other knowledge

In relation to the amortisation of intangible assets, the general rule in IAS 38 Intangibles, is that unless demonstrated otherwise:

• the residual value does not enter into the determination of the amortisation charge

• the residual need no be reviewed at the end of each annual reporting period

• all intangible assets have a residual value at least equal to the amount of maintenance costs incurred

• the residual value is presumed to be zero

When an internally generated asset meets the recognition criteria, the appropriate treatment for costs previously expensed is:

• reinstatement

• no adjustment as these amounts may not be reinstated

• include in the cost of the development of the asset

• capitalise into the cost of the asset and adjust the opening balance of retained earnings