IAS38 Intangible assets - identifiable, non-monetary assets, without physical substance.

Assets - resources, controlled from past events and with future economic benefits expected.

SEPARATE ACQUISITION:

1. Probable – expected future economic benefits will flow to the entity; and

2. Cost can be reliably

COSTS INCURRED UNEVENLY:

Initially recognised at either:

 Fair value

 Nominal value plus direct expenses to prepare for use. Examples include:

 License to operate national lottery

 Radio station.

Finite useful life – Choose either amortised cost or revaluation model:

Cost model

 Determine useful life 

 Residual value – assumed zero unless active market exists or a commitment by third party to purchase the intangible asset exists 

 Determine amortisation method

 Review above annually

 Rebuttable presumption that revenue based amortization is inappropriate

 Amortisation method reflects the pattern in which future economic benefits are expected to be consumed.

 Amortisation begins when available for use.

Revaluation model

 Fair value at revaluation date

 Fair value determined by referring to active market

 If no active market, use cost model

 Revaluation done regularly

 The net carrying amount of the asset is adjusted to the revalued amount and

− The gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset. For example, the gross carrying amount may be restated by reference to observable market data or

it may be restated proportionately to the change in the carrying amount. The accumulated amortisation at the date of the revaluation is adjusted to equal the difference between the gross carrying amount and the carrying

amount of the asset after taking into account accumulated impairment losses

− Accumulated amortisation is eliminated against the gross carrying amount.

 Credit to revaluation surplus net of Deferred Tax

 Transfer to retained earnings on realisation.

Indefinite useful lives

 No foreseeable limit to future expected economic benefits

 Not amortised

 Test for impairment annually or when an indication exists

 Review annually if events and circumstances still support indefinite

useful life

 If no longer indefinite change to finite useful life.