Intangible Assets IDENTIFIABILITY Asset must be identifiable in order to distinguish it clearly in goodwill. Asset must be identifiable when : a.

. It is separable , meaning , the asset is capable of being separated from the entity and sold , transferred , licensed , rented or exchange ,either individually or together with a related contract , asset or liability regardless of whether the entity intends to do so. b. It raises from contractual or other leagal rights , regardless of whether these rights and obligations. CONTROL Asseet must be under the control of the entity as a result of a past event.Control is the

Recognition An intangible asset shall be recognized if the following conditions are present: a. It is probable thet future economic benefits attributable tot the asset will flow to the entity. b. The cost of the intangible asset ca be measured reliably. Judgment is usually exercised in assseing th degree of certainity of the future economic benefits.The judgment is based on external evidence.

Measurement Separate Acquisition If an intangible asset is acquired separately ,the cost of the intangible asset can be measured reliably , particularly so if the purchase consideration in the form of cash or other monetary assets.The cost of a separately acquired intangible asset comprises its purchase price , including any import duties and nonrefundable purchase purchase taxes after deducting trade discounts and rebates and any directly attributable costs of preparing the asset for its intended use. If the payment for an itangible asset is deferred beyond normal credit terms its cost is the cash price equivalent.The difference between the cash price equivalent and the total payments is recognized as interest expense over the credit period. Acquisitio as part of business combination a. If an intangible asset is

Amortization The method of amortization shall reflect the pattern in which the future economic benefits from the asset are expected to be consumed by the entity. RESIDUAL VALUE The residual value of an asset shall presumed to be zero , except : a. When a third party is committed to buy the intangible asset at the end of its useful life. b. When there is an acive market for the intangible asset to that its expected residual value can be measured and it is probable that there will be a market for the asset at the end of its useful life.

Proforma entries

Change in amortization method and useful life The amotization method and the useful life of an intangible asset shall be reviewed at each

power of the entity to obtain the future economic benefits flowing from the intangible asset and restrict the access of others to those benefits. FUTURE ECONOMIC BENEFITS Future economic benefits may include revenue from the sale of products or services ,cost savings or other bebefits resulting from the use of the asset by the entity.

acquired in a business combination the cost of the intangible asset is based on its fair value on the date of acquisition. b. If there is an active market ,th quoted market price which is usually the current bid price provides the mast reliable estimate of fair value. c. If there is no active market, the fair value of the intangible aaset is equal to the amount which would be paid by the entity for the asset in an arms length transaction between knowledgeable and willing parties. Acquisition by government grant An intangible asset may be acquired by way of a government grant , free of charge or for nominal consideration Acquisition by Exchange One or more intangible assets may be acquired

financial year end. If the expected useful life of the intangible asset is significantly different from yhe previous estimate ,the amortization period shall be changed accordingly.If there has been a significant change in the expected pattern of economic benefits from the asset , the amortization method shall be changed to reflect the new pattern. Such changes shall be accounted for as changes in accounting estimates and therefore , shall be treated currently and prospectively.

in exchange for a non monetary asset or a combination of monetary asset and non monetary asset.The cost of such an intangible asset is measured at fair value unless the exchange transaction lacks commercial substance or the fair value of neither the asset given up nor the asset received is reliably measureable.If exchange transactions lacks commercial substance, the acquired intangible asset is not measured at fair value but its cost is the carrying amount of the asset given up. Acquisitio by selfcreation or internal generation The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create , produce and prepare the asset to be capable of operating it in manner intended by management.