Intangible Assets - Mary and Ally

SME – Intangible FULL IFRS – Intangible
Assets Assets
Definition: Definition:
a. It is separable. Essential Criteria

b. It arises from contractual or a. Identifiability
other legal rights. Separable
Arises from contractual/other
legal rights
b. Control
Entity must be able to enjoy
the future economic benefits
from the asset and prevent
others from enjoying the same
benefits
Legal rights enforceable in a
court of law
c. Future economic benefits
Revenue
Cost savings
Recognition: Recognition:
a. It is probable that the expected a. It is probable that the future

future economic benefits that are economic benefits that are
attributable to the asset will flow to attributable to the asset will flow
the entity. to the entity.
b. The cost or value of the asset can b. The cost of intangible asset can
be measured reliably. be measured reliably.
c. The asset does not result from

expenditure incurred internally on
an intangible item.
Initial Measurement @cost Initial Measurement:
a. Separate acquisition a. Separate Acquisition:

 purchase price AT COST
 import duties  Purchase price
 nonrefundable purchase  Import duties
taxes after discounts and
 Nonrefundable purchase
rebates
taxes
 any directly attributable cost
 Any directly attributable
of preparing the asset for
cost
intended use
b. Acquisition as part of a If payment is deferred
business combination beyond normal credit
 @ fair value on the terms:
acquisition date  Cost = cash price
equivalent
c. Acquisition by way of
government grant b. Acquisition as part of a
 @ fair value at the date business combination
grant is received or  Cost= Fair Value on date
receivable of acquisition
d. Acquisition by exchange c. Acquisition by way of

 @fair value of the asset government grant
given up or fair value of  Fair Value
asset received or
whichever is clearly  Nominal amount/ zero +
determinable directly attributable cost
However, the cost of the intangible in preparing asset for
asset received is equal to the intended use.
carrying amount of the asset given
up when:
d. Acquisition by internal
 The exchange transaction
lacks commercial generation
substance. Recognized as an
 The fair value of the assets expense:
exchanged cannot be  Expenditure that does
measured reliably. not meet the recognition
criteria for intangible
e. Acquisition by self- asset, except when it is
acquired in a business
creation or internal
combination
generation  Start-up cost
Expensed immediately:  Training costs
 Start-up cost  Advertising and
 Training cost promotional costs
 Advertising and promotion  Business relocation or
 Relocation cost reorganization costs
 Expenditures on internally  Expenditures that are
generated brands, logos, initially recognized as an
mastheads, publishing titles, expense
customer list, and others  Research costs are
similar in substance expensed when incurred
 Expenditures on internally 
generated goodwill Capitalized:
 All research and
 Development cost are
development costs capitalized when the
asset fulfills certain
prerequisites
Subsequent Measurement: Subsequent Measurement:
@cost less accumulated amortization and Cost model

any impairment losses or
Revaluation model
 Fair Value of
revaluation
(if there’s an active
market), less any
subsequent amortization
and any subsequent
impairment loss
Useful Life: Useful Life:

Can useful life be established reliably? Can useful life be established reliably?
YES YES
 Useful life is finite  Useful life is either
NO infinite or finite
 Useful life shall be NO
determined based on  No assumption of 10
management years
estimate not
exceeding 10 years
All research and development costs are Research and development cost are
recognized as expenses when incurred expensed when incurred. However,
development cost may be capitalized if
the asset fulfills certain prerequisites.
Intangible assets are measured Intangible assets are measured using

subsequently using the cost model only cost model or revaluation model.
The useful life of an intangible asset is The useful life of an intangible asset is
considered to be finite. considered either infinite or finite.
All intangible assets, including goodwill, Intangible assets with:

are amortized
FINITE USEFUL LIFE
 Amortized over the
useful life
INFINITE USEFUL LIFE
 are not amortized but
tested for impairment
When are intangible assets When are intangible assets

tested for impairment? tested for impairment?
Intangible assets are tested for Intangible assets with:

impairment when there is an indication FINITE USEFUL LIFE
that the asset may be impaired.  When there is an
indication that the
asset may be
impaired
INFINITE USEFUL LIFE

 Tested annually and
whenever there is an
indication that the
asset may be
impaired

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SME – Intangible FULL IFRS – Intangible

a. It is separable. Essential Criteria

a. It is probable that the expected a. It is probable that the future

c. The asset does not result from

Initial Measurement @cost Initial Measurement:

a. Separate acquisition a. Separate Acquisition:

d. Acquisition by exchange c. Acquisition by way of

@cost less accumulated amortization and Cost model

Useful Life: Useful Life:

Intangible assets are measured Intangible assets are measured using

All intangible assets, including goodwill, Intangible assets with:

When are intangible assets When are intangible assets

Intangible assets are tested for Intangible assets with:

INFINITE USEFUL LIFE

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