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Educational Material on Ind AS 38 Intangible Assets

Educational Material on Ind AS 38 Intangible Assets

Ind AS 38 Intangible Assets : Ind AS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights). Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised). Ind AS 38 was revised in March 2004 and applies to intangible assets acquired in business combinations occurring on or after 31 March 2004, or otherwise to other intangible assets for annual periods beginning on or after 31 March 2004.

History of Ind AS 38

DateDevelopmentComments
February 1977Exposure Draft E9 Accounting for Research and Development Activities 
July 1978Ind AS 9 (1978) Accounting for Research and Development Activities issuedEffective 1 January 1980
August 1991Exposure Draft E37 Research and Development Costs published 
December 1993Ind AS 9 (1993) Research and Development Costs issuedOperative for annual financial statements covering periods beginning on or after 1 January 1995
June 1995Exposure Draft E50 Intangible Assets published 
August 1997E50 was modified and re-exposed as Exposure Draft E59 Intangible Assets 
September 1998Ind AS 38 Intangible Assets issuedOperative for annual financial statements covering periods beginning on or after 1 July 1998
31 March 2004Ind AS 38 Intangible Assets issuedApplies to intangible assets acquired in business combinations occurring on or after 31 March 2004, or otherwise to other intangible assets for annual periods beginning on or after 31 March 2004
22 May 2008Amended by Improvements to IFRSs  (advertising and promotional activities, units of production method of amortisation)Effective for annual periods beginning on or after 1 January 2009
16 April 2009Amended by Improvements to IFRSs  https://www.iasplus.com/en/projects/completed/aip/annual-improvements-2007-2009(measurement of intangible assets in business combinations)Effective for annual periods beginning on or after 1 July 2009
12 December 2013Amended by Annual Improvements to to IFRSs 2010 – 2012 cycle  (proportionate restatement of accumulated depreciation under the revaluation method)Effective for annual periods beginning on or after 1 July 2014
12 May 2014Amended by Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to Ind AS 16 and IAS 38)Effective for annual periods beginning on or after 1 January 2016

Educational Material on Ind AS 38 Intangible Assets

Ind AS 38 Intangible Assets : An intangible asset is an asset that is not physical in nature. Corporate intellectual property, including items such as patents, trademarks, copyrights and business methodologies, are intangible assets, as are goodwill and brand recognition. An intangible asset is an asset that is not physical in nature. Corporate intellectual property, including items such as patents, trademarks, copyrights and business methodologies, are intangible assets, as are goodwill and brand recognition. Intangible assets exist in opposition to tangible assets which include land, vehicles, equipment, inventory, stocks, bonds and cash.

Key definitions

Intangible asset: an identifiable non-monetary asset without physical substance. An asset is a resource that is controlled by the entity as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets) are expected. [IAS 38.8] Thus, the three critical attributes of an intangible asset are:

  • Identifiable
  • Control (power to obtain benefits from the asset)
  • Future economic benefits (such as revenues or reduced future costs)

Identifiable: an intangible asset is identifiable when it: [Ind  AS 38.12]

  • is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract) or
  • arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Objective

The objective of Ind AS 38 is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another IFRS. The Standard requires an entity to recognise an intangible asset if, and only if, certain criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures regarding intangible assets. [Ind AS 38.1]

Scope

Ind AS 38 applies to all intangible assets other than: [Ind AS 38.2-3]

  • financial assets (see Ind AS 32 Financial Instruments: Presentation)
  • exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources)
  • expenditure on the development and extraction of minerals, oil, natural gas, and similar resources
  • intangible assets arising from insurance contracts issued by insurance companies
  • intangible assets covered by another IFRS, such as intangibles held for sale (IFRS 5 Non-current Assets Held for Sale and Discontinued Operations), deferred tax assets (Ind AS 12 Income Taxes), lease assets (Ind AS 17 Leases), assets arising from employee benefits (Ind AS 19 Employee Benefits (2011)), and goodwill (IFRS 3 Business Combinations).

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Educational Material on Ind AS 38 Intangible Assets 

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Educational Material on Ind AS 38 Intangible Assets

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