The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures regarding intangible assets. [IAS 38.78] Examples where they might exist: Under the revaluation model, revaluation increases are recognised in other comprehensive income and accumulated in the "revaluation surplus" within equity except to the extent that they reverse a revaluation decrease previously recognised in profit and loss. [IAS 38.85], Classification of intangible assets based on useful life, Intangible assets are classified as: [IAS 38.88], 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 amortised on a systematic basis over that life: [IAS 38.97], Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an asset. Amortisation: over useful life, based on pattern of benefits (straight-line is the default). Review useful life, residual value & amortization methods annually. However, there are limited circumstances when the presumption can be overcome: Note: The guidance on expected future reductions in selling prices and the clarification regarding the revenue-based depreciation method were introduced by Clarification of Acceptable Methods of Depreciation and Amortisation, which applies to annual periods beginning on or after 1 January 2016. training cost [IAS 38.69] advertising and promotional cost, including mail order catalogues [IAS 38.69] relocation costs [IAS 38.69] For this purpose, 'when incurred' means when the entity receives the related goods or services. If the revalued intangible has a finite life and is, therefore, being amortised (see below) the revalued amount is amortised. IPSAS 23, training. If the entity has made a prepayment for the above items, that prepayment is recognised as an asset until the entity receives the related goods or services. [IAS 38.57], Operating system for hardware: include in hardware cost. 2 0 obj Some items, like in-process R&D project, This Standard requires an entity to recognise an intangible asset if, and only if, specified criteria are met. Intangible assets with IAS 38 has illustrative examples. the cost of the asset can be measured reliably. search for application of knowledge and material. If desired training is not in the list above, please contact us. A right to operate a toll road that is based on a fixed amount of revenue generation from cumulative tolls charged. <> IAS Training can also design training specific to the needs of accredited conformity assessment bodies and Regulatory Authorities on subjects within our scope of expertise. This is shown in SFP as intangible non-current asset. Obviously, not all expenditures that are within the scope of IAS 38 should be recognised as assets. It is correct that International Accounting Standards and especially IAS 16 Property, Plant and Equipment has specifically ruled out the capitalization of any expenditure incurred on training costs. [IAS 38.33], If recognition criteria not met. Example on the scope of IAS 38. Der International Accounting Standard 38 (IAS 38) ist ein Rechnungslegungsstandard des International Accounting Standards Board (IASB), der die Bilanzierung von immateriellen Vermögenswerten regelt. The Standard requires an entity to recognise an intangible asset if, and only if, certain criteria are met. Measurement of cost The … In the paragraph 17 of IAS 16 there are the examples of what expenses are considered to be directly attributable and therefore, can be capitalized (or included in the cost of an asset): Costs of employee benefits (IAS 19 Employee benefits) arising directly … endobj For example, IAS 38 does not apply to the following: 1. intangible assets held by an entity for sale in the ordinary course of Practical guide to Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 for interest rate benchmark (IBOR) reform The IASB has issued amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 that address issues arising during the reform of benchmark interest rates including the replacement of one benchmark rate with an alternative one. [IAS 38.104], The intangible asset is expressed as a measure of revenue; and, it can be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated. IAS-38 does not allow capitalization of cost relating to the research work, staff training and advertisement. A company incurs research costs, during one year, amounting to $125,000, and development costs of $490,000. [IAS 38.54], Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. [IAS 38.24], Measurement subsequent to acquisition: cost model and revaluation models allowed, An entity must choose either the cost model or the revaluation model for each class of intangible asset. If an entity cannot distinguish the research phase of an internal project to create an intangible asset from the development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only. IFRS Training IAS 16 :Measurement at Recognition M easurement at Recognition. [IAS 38.70], Intangible assets are initially measured at cost. [IAS 38.22] The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. [IAS 38.1], IAS 38 applies to all intangible assets other than: [IAS 38.2-3]. training cost [IAS 38.69] advertising and promotional cost, including mail order catalogues [IAS 38.69] relocation costs [IAS 38.69] For this purpose, 'when incurred' means when the entity receives the related goods or services. [IAS 38.34], Initial recognition: internally generated brands, mastheads, titles, lists, Brands, mastheads, publishing titles, customer lists and items similar in substance that are internally generated should not be recognised as assets. So these costs should be charged to statement of comprehensive income in the period in which they incurred. training cost [IAS 38.69] advertising and promotional cost, including mail order catalogues [IAS 38.69] relocation costs [IAS 38.69] For this purpose, ‘when incurred’ means when the entity receives the related goods or services. patented technology, computer software, databases and trade secrets, trademarks, trade dress, newspaper mastheads, internet domains, video and audiovisual material (e.g. Under IAS 38 paragraph 69, the below costs should be expensed: (a) Travel-related costs; costs related to employee salaries; and costs related to feasibility studies, accounting, tax, and government affairs (b) Training of local motion pictures, television programmes), licensing, royalty and standstill agreements, customer and supplier relationships (including customer lists), it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and. If desired training is not in the list above, please contact us . The training costs are deemed by the entity to not meet the definition of an intangible asset under IAS 38 Intangible Assets since the employees can leave the entity’s employment nor does it identify it as a performance obligation under IFRS 15. Online training is normally authorised once fees have been paid. IAS 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). IAS 38 states that these expenditures cannot be distinguished from the costs of developing the business as a whole, and so it prohibits recognition of those items as intangible assets. IAS 38 does not allow the recognition of training cost as an intangible asset as the future actions of employees are not in the control of the entity. are defined by IAS 38 as an identifiable non-monetary assets without physical substance. Also, no entity can expect with reasonable certainty that future economic benefits from training will flow to the entity as sometimes training increases the productivity of the labour and sometimes not . Whether the web site is an internally generated intangible asset that is subject to the requirements of IAS 38 Intangible Assets The appropriate accounting treatment of such expenditure. [IAS 38.107], Its useful life should be reviewed each reporting period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. You can read in more detail that why training costs are not allowed for capitalization as an asset or as part of the cost of other asset in this QnA. This Standard deals with the accounting treatment of Intangible Assets, which are not covered by other accounting standards including the guidance for the main issues related to the recognition & measurement of intangible assets, including relevant disclosure requirements. [IAS 38.111], Measurement subsequent to acquisition: intangible assets with indefinite useful lives, An intangible asset with an indefinite useful life should not be amortised. The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. [IAS 38.71], Initial recognition: research and development costs. However, some jurisdictions may have an active market for freely transferable licences, which may provide a fair value for some intangible assets. You can read in more detail that why training costs are not allowed for capitalization as an asset or as part of the cost of other asset in this QnA . 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