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Philippine Public Sector Accounting Standard 31

INTANGIBLE ASSETS

Table of Contents
PAG
Number

BACKGROUND
INTRODUCTION TO THE IPSAS 31
PHILIPPINE APPLICATION GUIDANCE TO IPSAS 31
Scope

Subsequent Measurement

Intangible Assets with Finite Useful Lives


Amortization Method

Effective Date

PPSAS 31 - Intangible Assets


January 2014

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Philippine Public Sector Accounting Standard 31


INTANGIBLE ASSETS

Background
This Philippine Public Sector Accounting Standard (PPSAS) 31 consists of
International Public Sector Accounting Standard (IPSAS) 31, Intangible
Assets, and the Philippine Application Guidance (PAG) prepared to suit the
Philippine public sector situation.
The IPSAS 31 was issued in January 2010 by the International Public Sector
Accounting Standards Board (IPSASB) of the International Federation of
Accountants (IFAC). This includes amendments resulting from IPSASs issued
up to January 15, 2012.
The PAG (in italics) provides supplementary guidance on the proper
implementation of
IPSAS 31.
Introduction to the IPSAS 31
IPSAS 31 prescribes the accounting treatment for intangible assets that are
not dealt with specifically in another Standard. It prescribes the principle for
its recognition and measurement as well as its disclosure requirements.
Philippine Application Guidance to IPSAS 31
Scope
PAG1.Paragraph 4 deals with the applicability of this Standard to all public
sector entities other than Government Business Enterprises (GBEs).
GBE is an entity that has all the following characteristics: (a) Is an
entity with the power to contract in its own name; (b) Has been
assigned the financial and operational authority to carry on a business;
(c) Sells goods and services, in the normal course of its business, to
other entities at a profit or full cost recovery; (d) Is not reliant on
continuing government funding to be a going concern (other than
purchases of outputs at arms length); and (e) Is controlled by a public
sector entity.

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January 2014

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This standard shall be applied to all National Government Agencies


(NGAs), Local Government Units (LGUs) and Government-Owned
and/or Controlled Corporations (GOCCs) not considered as GBEs.

Subsequent Measurement
PAG2.Paragraph 71 of the standard allows a choice of accounting models for
measurement of intangible asset subsequent to acquisition:

cost model (paragraph 73): the asset is carried at cost less


accumulated depreciation and impairment losses; or

revaluation model(paragraph 74): the asset is carried at


revalued amount, which is fair value at revaluation date less
subsequent depreciation and impairment losses. It requires that
fair values be determined by reference to an active market and
that such revaluations be made with such regularity.

For simplicity and uniformity of application, the cost model shall be


adopted.
Intangible Assets with Finite Useful Lives
Amortization Method
PAG3.Paragraph 97 mentions a number of amortization method from which
the agency may choose on the basis of the expected pattern of
consumption of the expected future economic benefits or service
such as: straight line method, diminishing balance method, and the
unit of production method.
For uniformity, the straight line method of amortization shall be
adopted.
Effective Date
PAG4.This PPSAS shall apply for annual financial statements covering periods
beginning January 1, 2014.

PPSAS 31 - Intangible Assets


January 2014

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Public Sector Auditing Standards


Board
(PSSB Auditing)