Ind AS 38: Intangible Assets#
Definition#
An intangible asset is an identifiable non-monetary asset without physical substance:
- Separable (can be sold, rented)
- Arises from contractual or legal rights
- Future economic benefits expected
Initial Recognition#
An intangible asset is recognized if:
- Future economic benefits probable
- Cost can be measured reliably
- Asset is identifiable (separable or arises from rights)
Research & Development#
Research Phase#
- Costs expensed as incurred
- No intangible asset recognized
- Examples: market research, prototype testing
Development Phase#
- Costs can be capitalized if:
- Technical feasibility
- Intention to complete
- Ability to generate future benefits
- Adequate resources available
- Costs measurable reliably
Capitalizable Costs#
- Materials and direct labor
- Directly attributable overheads
- Borrowing costs (if applicable)
Subsequent Measurement#
Cost Model#
- Carried at cost less accumulated amortization and impairment
Revaluation Model#
- Fair value less subsequent amortization
- Revaluation surplus to OCI
Amortization#
Intangible assets with finite life#
- Amortized over useful life
- Review useful life annually
- Test for impairment if indicators exist
Intangible assets with indefinite life#
- No amortization
- Annual impairment testing
- Review for indefinite life status
Goodwill (Other than Business Combination)#
Goodwill from separate acquisition:
- Recognized at cost
- Tested annually for impairment
- Not amortized
Disclosure Requirements#
- Gross carrying amount and accumulated amortization
- Reconciliation of carrying amount
- Useful life or amortization rate
- Methods used for amortization
- Research and development expenditure charged to expense