Name :Zahid Usman

CMS #: 28127
Subject: Advance Financial
accounting
Uni: Riphah international
Assignment no 7
(Solution )
 EXPLANATORY SUMMARY
LECTURE NO 7 OF ADVANCE
FINANCIAL ACCOUNTING
International Accounting Standard (IAS)

Intangible Asset (IAS38)

1) Définition
2) Recognition Criteria
3) Subséquent Recognition
4) Disposal/De recognition
 What Is Intangible Asset?

Definition: Intangible Assets are those which are :

1: Identifiable
2: Non-monetary Asset
3: without Physical substance
1: Identifiable

1) Separable
2) Arise from contractual/legal rights
i) Separable
ii) Non separable

2 : Non-Monetary Asset
i)Units of currency
ii) Any asset which can be received in Fixed or determinable
Exceptions (Assets recoded not according to IAS38)
1) Intangible Asset held for sale Leads with IAS 2 (IAS2)
2) Deferred tax asset (IAS 12)
3) Lease of Intangible Asset (IAS 17(old) IFRS 16 (new)
4) Asset arising from employee benefit (IAS 19)
5) Financial Asset will be Accounted for (IAS 39(old), IFRS o9(New))
6) Good Will (Business Combination) (IFRS 3)
7) Deferred Acquisition Cost Arising from Insurance Contract
(IFRS 04(old) IFRS 17 (new))
8) Non-current Intangible Asset held For Sale (IFRS 5)
9) Asset Arising From contracts with Customers ( IFRS 39, IFRS15)
10) Exploration and Evaluation Asset (IFRS 6, Natural Gas)
11) Cost Incurred Extraction of Oil well, Natural gas& Non generated
Asset(Intangible (IFRS 06) or Similar Non generation Asset
 Guidance of IAS

Guidance of IAS
1)Internally generated good will
2) Internally generated brands /must head publishing titles
3)Internally generated Asset
1: Research Phase
2: Development Phase
1: Research Phase

i) Original
ii) Planned investigation
(Expenditures)

2: Development Phase
Capitalize if certain Conditions meet
Conditions (6)
i) Technical feasibility
ii) Intentions to Complete
iii) Ability To sell it or use it
iv) How the Future economic benefit will be generated
i) Sell-Existence of active environment
ii) Use-usefulness
v) Availability of Technical, Financial, Resources, or other resources
vi) Reliably Identifiable
 INTANGIBLE ASSET (IAS 38)
2) Recognition
i)It should be meet the definition of Assets
ii)cost are value measure reliably
3) Subsequent Recognition
i) Cost Model
ii) Revaluation Model
1) Cost Model

i) Intangible Asset can have Identifiable useful life .

ii) Amortization (it will cannot be amortize annually tested for Impairment
iii) If you not know pattern then use straight line method
iv) Revenue based method
i)IA is expressed in terms of revenue
ii) Revenue
v) Residual value (will be zero, only will not be aero in theses two cases which are
As follows) :
i)Commitment with third party of Purchase promise
ii) Active market should exist not enough but at the end of its useful life .
2) Revaluation Model

i) Fair value -It will be calculated on the active market

Active market three conditions of active market must meet.

ii) Items traded are homogeneous.

iii) Willing buyers /Sellers Cn be found it available

iv) Prices are available to general public