INTANGIBLE

ASSET
IAS 38
 Hello!
I am Mel Christian De
Vera
I am here to present
INTANGIBLE ASSETS

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DEFINITION
WHAT IS INTANGIBE ASSET?
DEFINITION
✘ 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 future benefits
EXAMPLE: PURCHASE OR SELF-CREATION

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THREE CRITICAL
ATTRIBUTES OF
INTANGIBLE
ASSETS

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IDENTIFIABILITY

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

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EXAMPLES:
Patented technology,
computer software,
databases and trade
secrets

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EXAMPLES:
Trademarks, trade
dress, newspaper
mastheads, internet
domains

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EXAMPLES:
Video and audiovisual
material (e.g. motion
pictures, television
programmes)

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 CONTROL
Power to obtain benefits from the asset

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Future Economic Benefits
Such as future revenues or reduced future costs

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INTANGIBLE CAN BE
ACQUIRED
THROUGH WHAT?
✘ By separate purchase
✘ As part of a business
combination
✘ By a government grant
✘ By exchange of assets
✘ By self-creation

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RECOGNITION
it is probable that the the cost of the asset
future economic can be measured
benefits that are reliably.
attributable to the
asset will flow to the
entity; IF NOT: RECOGNIZED
AS EXPENSE

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MEASUREMENT
• INITIAL
MEASURMENT
• SUBSEQUENT
MEASUREMENT

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INITIAL MEASUREMENT
Intangible assets are initially
measured at cost.

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SUBSEQUENT
MEASUREMENT
Indefinite life: no Finite life: a limited
foreseeable limit to the period of benefit to the
period over which the entity.
asset is expected to
generate net cash
inflows for the entity.

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CLASSIFICATION OF INTANGIBLE
ASSETS BASED ON USEFUL LIFE
COST MODEL REVALUATION
- cost less MODEL
accumulated - evalued amount
amortisation and (based on fair value)
impairment losses. less any subsequent
amortisation and
impairment losses

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MEASUREMENT SUBSEQUENT TO
ACQUISITION: INTANGIBLE ASSETS
WITH FINITE LIVES
✘ The cost less residual value of an intangible asset
with a finite useful life should be amortized on a
systematic basis over that life
✘ Pattern cannot be determined reliably, amortize
by the straight-line method.
✘ Amortization charge is recognized in profit or loss
amortization period should be reviewed at least
annually

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MEASUREMENT SUBSEQUENT TO
ACQUISITION: INTANGIBLE ASSETS
WITH INDEFINITE USEFUL LIVES
✘ An intangible asset with an indefinite useful life
should not be amortized.
✘ The asset should also be assessed for
impairment in accordance with IAS 36.

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WHAT IS IMPAIRMENT?
✘  impairment describes a permanent
reduction in the value of a company's asset,
typically a fixed asset or an intangible
asset.

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WHAT IS DISPOSAL?
✘ Asset disposal is the removal of
a long-term asset from the
company’s accounting records. 

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GOOD WILL
The portion of the purchase
price that is higher than the
sum of the net fair value of all
of the assets purchased in the
acquisition and the liabilities
assumed in the process.

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WHY IS GOOD WILL NOT
QUALIFIED AS INTANGIBLE
ASSET?
Because it is considered as
Unidentifiable Intangible asset because
it’s not capable of being separated
from the company

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MEASUREMENT OF GOODWILL
✘ Internally generated goodwill is expensed as a loss,
✘ Externally generated goodwill when a company
acquires or merges with another company is
capitalized as an asset. This means that when a
company pays above the fair value of another
company to acquire it, the difference is goodwill.

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 Thanks!
Any questions?
You can find me at
melchristiandevera@gmail.
com

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