Intangible assets

Define the term "intangible asset"

They are identifiable, non-monetary asset without physical substance. An asset is identifiable when it arises from contractual or other legal rights or when it is "separable".

What’s included in the main features of intangible assets

-separable

-monetary assets

-definition on non tangible

Explain what “separable” means

An asset is separable if it can be separated from the entity and sold, transferred, licensed, rented or exchanged.

Goodwill is not separable and is therefore excluded from the IAS38 definition of intangible assets

What do they mean by “non-monetary”?

• Intangible assets are non-monetary and therefore items such as cash, bank deposits and trade receivables are excluded from the definition

• Monetary assets are money held and assets to be received in fixed or determinable amounts of money.

Explain how an intangible asset should be measured at its initial recognition if it is acquired in a separate transaction.

An intangible asset acquired in a separate transaction should be measured initially at its cost.

Explain how an intangible asset should be measured at its initial recognition if it is acquired in a business combination.

An intangible asset acquired in a business combination should be measured initially at its fair value on the date of the acquisition.

What is research expenditure?

Expenditure on original and planned investigation done for gaining new scientific/ technical knowledge and understanding.

Written off as an expense

What is development expenditure?

• Expenditure on the application of research

• To a plan or design for the production of new/ substantially improved materials, products, or services.

Recognised as intangible asset if required conditions are met