Objective
The objective of this Standard is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another Standard. This Standard requires an entity to recognise an intangible asset if, and only if, specified criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires specified disclosures about intangible assets.
Scope
This Standard shall be applied in accounting for intangible assets, except:
- intangible assets that are within the scope of another Standard;
- financial assets, as defined in IAS 32 Financial Instruments: Presentation;
- the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources); and
- expenditure on the development and extraction of minerals, oil, natural gas and similar non-regenerative resources.
Definitions
Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life.
An asset is a resource:
(a) controlled by an entity as a result of past events; and
(b) from which future economic benefits are expected to flow to the entity.
Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated amortisation and accumulated impairment losses thereon.
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction, or, when applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other IFRSs, eg IFRS 2 Share-based Payment
Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.
Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.
Entity-specific value is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (See IFRS 13 Fair Value Measurement.)
An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
An intangible asset is an identifiable non-monetary asset without physical substance.
Monetary assets are money held and assets to be received in fixed or determinable amounts of money.
Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.
The residual value of an intangible asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.
Useful life is:
- the period over which an asset is expected to be available for use by an entity; or
- the number of production or similar units expected to be obtained from the asset by an entity.
Recognition and measurement
The recognition of an item as an intangible asset requires an entity to demonstrate that the item meets:
- the definition of an intangible asset; and
- the recognition criteria.
Expenditure on an intangible item shall be recognised as an expense when it is incurred unless:
- it forms part of the cost of an intangible asset that meets the recognition criteria; or
- the item is acquired in a business combination and cannot be recognised as an intangible asset. If this is the case, it forms part of the amount recognised as goodwill at the acquisition date (see IFRS 3).
Measurement after recognition
An entity shall choose either the cost model in paragraph 74 or the revaluation model in paragraph 75 as its accounting policy. If an intangible asset is accounted for using the revaluation model, all the other assets in its class shall also be accounted for using the same model, unless there is no active market for those assets.
Disclosure
An entity shall disclose the following for each class of intangible assets, distinguishing between internally generated intangible assets and other intangible assets:
- whether the useful lives are indefinite or finite and, if finite, the useful lives or the amortisation rates used;
- the amortisation methods used for intangible assets with finite useful lives;
- the gross carrying amount and any accumulated amortisation (aggregated with accumulated impairment losses) at the beginning and end of the period;
- the line item(s) of the statement of comprehensive income in which any amortisation of intangible assets is included;
- a reconciliation of the carrying amount at the beginning and end of the period showing:
- additions, indicating separately those from internal development, those acquired separately, and those acquired through business combinations;
- assets classified as held for sale or included in a disposal group classified as held for sale in accordance with IFRS 5 and other disposals;
- increases or decreases during the period resulting from revaluations under paragraphs 75, 85 and 86 and from impairment losses recognised or reversed in other comprehensive income in accordance with IAS 36 (if any);
- impairment losses recognised in profit or loss during the period in accordance with IAS 36 (if any);
- impairment losses reversed in profit or loss during the period in accordance with IAS 36 (if any);
- any amortisation recognised during the period;
- net exchange differences arising on the translation of the financial statements into the presentation currency, and on the translation of a foreign operation into the presentation currency of the entity; and
- other changes in the carrying amount during the period.