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 Scope
This standard applies to all intangible assets
other than intangible assets held by an entity for sale in the
ordinary course of business, deferred tax assets, lease assets,
assets arising from employee benefits, financial assets, goodwill,
intangibles held for sale, insurance contracts, mineral rights and
exploration and development costs.
Intangible asset
An intangible asset is
defined as a nonmonetary asset without physical substance, and meets
the following conditions:
(1) the definition of an intangible asset
(a) identifiability
(b) control
(c) future economic benefits
(2) the recognition criteria of an intangible asset
(a) it is probable that the expected future economic benefits that
are attributable to the asset will flow to the entity; and
(b) the cost of the asset can be measured reliably.
Identifiability
An intangible asset is
identifiable when it is separable or arises from contractual or
other legal rights, regardless of whether those rights are
transferable or separable from the entity or from other rights and
obligations.
Sources of intangible
assets
Intangibles can be acquired
by separate purchase, as part of a business combination, by a
government grant, by exchange of assets, by internal generation
Internally Generated
Goodwill
Internally generated
goodwill shall not be recognized as an asset.
Research and
Development Costs
Expenditure on research
shall be recognized as an expense when it is incurred.
Development costs are
capitalized if, and only if, all of the following conditions can be
met:
(a) the technical feasibility of completing the intangible asset.
(b) its intention to complete the intangible asset and use or sell
it.
(c) its ability to use or sell the intangible asset.
(d) the intangible asset is able to generate probable future
economic benefits.
(e) the availability of adequate technical, financial and other
resources to complete the development.
(f) its ability to measure reliably the expenditure.
Unable to distinguish
the research phase from the development phase
The enterprise treats the
expenditure for that project as if it were incurred in the research
phase only.
In-process
Research and Development Acquired in a Business Combination
A research and development
project acquired in a business combination is recognized as an asset
at cost, even if a component is research.
Internally
Generated Brands, Mastheads, Titles, Lists
Brands, mastheads,
publishing titles, customer lists and items similar in substance
that are internally generated should not be recognized as assets.
Classification
of Intangible Assets Based on Useful Life
An entity shall assess
whether the useful life of an intangible asset is finite or
indefinite. Intangible assets are classified as indefinite life when
there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows for the entity. Intangible
assets are classified as finite life when there is a limited period
of benefit to the entity.
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
over that life.
The amortization method used
shall reflect the pattern in which the asset's future economic
benefits are expected to be consumed by the entity.
If that pattern cannot be
determined reliably, the straight-line method shall be used.
The amortization period
should be reviewed at least annually.
The asset should also be
assessed for impairment in accordance with SFAS 35.
Measurement
Subsequent to Acquisition: Intangible Assets with Indefinite Lives
An intangible asset with an
indefinite useful life should not be amortized.
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. If they do not, the change in the useful
life assessment from indefinite to finite should be accounted for as
a change in an accounting estimate.
The asset should also be
assessed for impairment in accordance with SFAS 35.
Disclosure
For each class of intangible
asset, disclose:
(1) useful life or amortization rate
(2) amortization method
(3) gross carrying amount at the beginning and end of the period,
accumulated amortization and impairment losses
(4) line items in the income statement in which amortization is
included
(5) reconciliation of the carrying amount at the beginning and the
end of the period showing:
(a) additions (business combinations separately)
(b) assets held for sale
(c) impairments, reversals of impairments
(d) amortization
(e) foreign exchange differences
(f) other changes in the carrying amount
An entity shall also
disclose:
(a) basis for determining that an intangible has an indefinite life.
(b) description and carrying amount of individually material
intangible assets.
(c) the amount of research and development expenditure recognized as
an expense in the current period.
Effective
Date
This Statement becomes
effective for financial statements for the fiscal year beginning on
and after January 1, 2007. Earlier adoption is allowed |
