Intangible assets

These flashcards cover key concepts and details regarding intangible assets and research and development costs as discussed in ACCA FR Financial Reporting lecture notes.

What is the definition of an intangible asset according to IAS 38?

An identifiable non-monetary asset without physical substance.

What are the two types of intangible assets mentioned in the lecture?

Internally generated intangible assets and purchased intangible assets.

List two criteria for initial recognition of intangible assets as per IAS 38.

It is probable that future economic benefits will flow to the entity; and the cost of the asset can be reliably measured.

What is the treatment of research costs according to IAS 38?

Research costs should be recognized as an expense as incurred because there is no certainty of future economic benefit.

Under IAS 38, how should development costs be treated?

Development costs can be capitalized as an intangible non-current asset if all recognition criteria are met.

What is required for an intangible asset to be recognized under IAS 38?

The intangible asset must meet the definition of an intangible asset and its recognition criteria.

What is amortisation and when does it apply to intangible assets?

Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life, applicable to intangible assets with a finite useful life.

What are the two models for subsequent measurement of intangible assets?

Cost model and revaluation model.

What are the capitalisation criteria for development costs?

All six criteria must be met including probable future economic benefits and technical feasibility.

What happens to the carrying amount of an intangible asset if it is derecognized?

The gain or loss on derecognition is recognized in profit or loss and is calculated as net disposal proceeds minus carrying amount.