IAS 38 Intangible Assets

International Accounting Standard 38

Overview of IAS 38

  • Issued: in 1998; followed by amendments
  • Effective date: 1 July 1999, amended version: 31 March 2004
  • What it does:
    • It defines intangible asset as an identifiable non-monetary asset without physical substance.
    • It specifies 2 recognition criteria:
      1. It is a resource controlled by the entity; and
      2. Future economic benefits are expected from the asset.
    • IAS 38 gives further guidance on all 3 aspects:
      1. Identifiability,
      2. Control, and
      3. Future economic benefits.
    • IAS 38 establishes general rules for recognition and measurement of intangible assets.
    • It deals with acquisition of intangibles under specific circumstances, such as:
      • Separate acquisition,
      • Acquisition as a part of a business combination,
      • Acquisition as a government grant,
      • Exchanges of assets,
      • Internally generated assets (including goodwill).
    • In relation to internally generated intangibles, IAS 38 gives further guidance on classification of generation of the asset into research phase and development phase and sets rules on determination of cost of an internally generated asset.
    • Standard also prescribes rules for measurement after recognition and permits 2 models:
      1. Cost model; and
      2. Revaluation model;
    • It explains various aspects of accounting for intangibles with finite useful life and indefinite useful life.
    • A number of disclosures is prescribed.

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