International Financial Reporting Standards

IAS 38
Intangible Assets

The views expressed in this presentation are those of the presenter, not necessarily those of the IASB or IFRS Foundation
IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Measurement
Intangible assets are measured initially at cost.

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Thereafter, intangible assets are usually measured using the cost modelcost less accumulated amortisation (unless indefinite life) and impairment impairment, if any. An intangible asset with a finite useful life is amortised and tested for impairment similarly to PPE. An intangible asset with an indefinite useful life is not amortised, but is tested annually for impairment or where h evidence id of fi impairment i t exists. i t
IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Examplesestimating useful life Ex 1: A acquires a customer list. Expects to

benefit from list for 13 years. y

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Ex 2: B acquires a 5-year airline route

authority (ARA) that is renewable every 5 years at no cost y
renewal is routine if specified rules and regulations are complied with B is compliant and expects to fly the route indefinitely an analysis of demand and cash flows supports those assumptions
IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Comparison with the IFRS for SMEs

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The main differences between IAS 38 and Section 18 Intangible Assets other than Goodwill of the IFRS for SMEs include that, in accordance with Section 18:
all intangible g assets are considered to have definite useful lives and, therefore, must all be amortised amortisation estimates need only be reviewed where there is an indication of a significant change

IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Judgements and estimates

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Control of an asset arises when the entity has the h power to obtain b i f future economic i b benefits fi from the underlying resource and to restrict the access of other to those benefits benefits. Intangible items of value to an entity may not be controlled by it, eg the assembled workforce and customer relationships. Research p phase expenditures p cannot be capitalised as assets. Development phase expenditures are capitalised when the specified criteria for asset recognition are satisfied.
IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Judgements and estimates continued

Amorisation requires:
identifying identif ing a finite useful sef l life intangible asset estimating useful life

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( (residual id l value l i is usually ll assumed dt to b be zero unless there is an active market) identifying the amortisation method that reflects most closely the consumption of the service potential of the item of the intangible p g asset.

Impairment testing requires many estimates (see IAS 36). ( )

IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org