Is IAS a transferable job

IAS 38: Intangible Assets

IAS 38 regulates the handling of intangible assets. Such is an identifiable, non-monetary asset with no physical substance. An asset is a resource that is in the company's control due to past events (e.g. acquisition or self-creation) and is expected to provide the company with future economic benefits (inflow of cash or other assets). Accordingly, the three decisive properties of intangible assets are: [IAS 38.8]

  • Identifiability [IAS 38.12]
    • Separability (ability to be separated and sold, transferred, rented or exchanged individually or as part of a group), or
    • based on a contractual or legal basis, regardless of whether the right is transferable or separable from the company or its other rights and obligations.
  • Power of disposal (power to obtain a benefit from the asset)
  • future economic benefits (income, cost savings)

Acquisition [edit | Edit source]

Intangible assets can be obtained through separate acquisition as part of a business combination, through a government grant, through the exchange of assets, or through self-production (internal generation).

Approach [edit | Edit source]

The two criteria to be fulfilled for the recognition of intangible assets are:

  • the sufficient probability of future benefit from the use of the asset
  • the reliable valuation of the acquisition or production costs.

The likelihood of future economic benefits must be based on reasonable and well-founded assumptions about framework conditions that will exist over the useful life of the asset. [IAS 38.22] In the case of intangible assets that were acquired separately or as part of a business combination, the probability criterion is always considered to be met. [IAS 38.33]

If an intangible asset neither meets the definition nor the recognition criteria of an intangible asset, according to IAS 38 the expenditure for this asset is to be recognized as an expense when it is incurred. [IAS 38.68]

The subsequent capitalization of previous expenses as an asset is prohibited. [IAS 38.71]

Research and development Edit source]

Research expenses are always to be recorded as expenses because future cash flows are still uncertain. In the case of development expenditure, it is necessary to examine whether further criteria for recording as an intangible asset are met or not. These are:

  1. the technical equipment to complete the intangible asset so that it can be used or sold,
  2. the intention of completion,
  3. the ability to use or sell it,
  4. a business model of how it can generate future inflows,
  5. access to appropriate technical, financial or other resources to complete the development,
  6. the reliable recording of the expenses incurred

If the research phase cannot be clearly separated from the development phase, all expenditure is recorded as an expense.

Rating [edit | Edit source]

Initial assessment [edit | Edit source]

Intangible assets are at their acquisition or production costs. to rate. [IAS 38.24]

Follow-up evaluation [edit | Edit source]

The right to choose between the cost method and the revaluation method applies. [IAS 38.72]

Acquisition cost method: After initial recognition, an intangible asset is to be recognized at its acquisition or production costs, less any depreciation and all impairment losses. [IAS 38.74]

Revaluation method: Intangible assets can only be carried forward with a revaluation amount (based on the fair value) - less subsequent depreciation and impairment losses - if the fair value can be derived from an active market. [IAS 38.75] Such active markets for intangible assets are considered rare. [IAS 38.78] Examples of the possible existence of active markets are:

  • Milk quotas
  • Trader listing
  • freely transferable taxi licenses
  • Emission rights

According to the revaluation method, increases in value are included directly in equity under the item Revaluation reserve except to the extent that they reverse a revaluation loss recognized in profit or loss. If a revalued intangible asset has a determinable useful life and is depreciated accordingly (see below), the revalued amount must be depreciated. [IAS 38.85]

Differentiation based on the service life [edit | Edit source]

Intangible assets are classified according to: [IAS 38.88]

  • Indefinite useful life: No foreseeable limit to the time over which the asset is expected to generate an inflow of benefits to the company.
  • Determinable useful life: A limited time for the benefit flow to the company.

Indefinite useful life Edit source]

An intangible asset with an indefinite useful life is not subject to scheduled amortization. [IAS 38.107]

Its useful life must be determined again in each reporting period in order to check whether the events and circumstances continue to support the assessment of an indefinite useful life. If this is not the case, the change in useful life from an indefinite to a definable one is to be treated as a change in the estimate. [IAS 38.109]

The asset must also be tested for impairment in accordance with IAS 36. [IAS 38.111]

Certain period of use [edit | Edit source]

The acquisition or production costs of an intangible asset with a determinable useful life less the residual value must be amortized over its useful life: [IAS 38.97]

  • The depreciation must reflect the course of use.
  • If the course of benefits cannot be reliably determined, it must be depreciated using the straight-line method.
  • The depreciation amount is to be recognized in the income statement, unless another IFRS requires recognition in the carrying amount of another asset.
  • The depreciation period must be reviewed at least once a year. [IAS 38.104]

The asset must also be tested for impairment in accordance with IAS 36. [IAS 38.111]

Details [edit | Edit source]


For each group of intangible assets, indicate: [IAS 38.118 and 38.122]

  • Useful life or depreciation rate
  • Depreciation method
  • Gross book value
  • Accumulated depreciation and impairment losses
  • Items in the income statement that include depreciation
  • Reconciliation of the book value at the beginning and at the end of the period with separate information about:
    • Additions (separate for additions from business combinations)
    • assets held for sale
    • Closures and disposals
    • Revaluations
    • Impairment charges
    • Write-ups
    • Scheduled depreciation
    • Net currency differences
  • Basis for determining that an intangible asset has an indefinite useful life
  • Description and book values ​​of individually significant intangible assets
  • certain information on intangible assets acquired through government grants
  • Information about intangible assets that are subject to ownership restrictions.
  • Obligations to acquire intangible assets

Additional information is required about:

  • Intangible assets, which are shown with revaluation amounts [IAS 38.124]
  • the amount of research and development expenditure recognized as an expense in the current period [IAS 38.126]

Sources [edit | Edit source]