04-15-2011, 02:15 AM
solution
Charge all research cost to expense. [IAS 38.54]
· Development costs are capitalized only after technical and commercial feasibility
of the asset for sale [IAS 38.57]
· Or uses have been established. This means that the entity must intend and be able
to complete the intangible asset and either uses it or sells it and be able to
demonstrate how the asset will generate future economic benefits. [IAS 38.57]
· Purchased: capitalize
Initial Recognition: 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. Subsequent
expenditure on that project is accounted for as any other research and
development cost (expensed except to the extent that the expenditure satisfies
the criteria in IAS 38 for recognizing such expenditure as an intangible asset).
Objective
The objective of IAS 38 is to prescribe the accounting treatment for intangible
assets that are not dealt with specifically in another IFRS. The Standard requires
an entity to recognize an intangible asset if, and only if, certain criteria are met.
The Standard also specifies how to measure the carrying amount of intangible
assets and requires certain disclosures regarding intangible assets. [IAS 38.1]
Scope
IAS 38 applies to all intangible assets other than: [IAS 38.2-3]
· financial assets
· exploration and evaluation assets (extractive industries)
· expenditure on the development and extraction of minerals, oil, natural
gas, and similar resources
· intangible assets arising from insurance contracts issued by insurance
companies
· intangible assets covered by another IFRS, such as intangibles held for
sale, deferred tax assets, lease assets, assets arising from employee
benefits, and goodwill. Goodwill is covered by IFRS 3.
Key Definitions
Intangible asset: an identifiable nonmonetary asset without physical substance.
An asset is a resource that is controlled by the entity as a result of past events (for
example, purchase or self-creation) and from which future economic benefits
(inflows of cash or other assets) are expected. [IAS 38.8] Thus, the three critical
attributes of an intangible asset are:
Charge all research cost to expense. [IAS 38.54]
· Development costs are capitalized only after technical and commercial feasibility
of the asset for sale [IAS 38.57]
· Or uses have been established. This means that the entity must intend and be able
to complete the intangible asset and either uses it or sells it and be able to
demonstrate how the asset will generate future economic benefits. [IAS 38.57]
· Purchased: capitalize
Initial Recognition: 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. Subsequent
expenditure on that project is accounted for as any other research and
development cost (expensed except to the extent that the expenditure satisfies
the criteria in IAS 38 for recognizing such expenditure as an intangible asset).
Objective
The objective of IAS 38 is to prescribe the accounting treatment for intangible
assets that are not dealt with specifically in another IFRS. The Standard requires
an entity to recognize an intangible asset if, and only if, certain criteria are met.
The Standard also specifies how to measure the carrying amount of intangible
assets and requires certain disclosures regarding intangible assets. [IAS 38.1]
Scope
IAS 38 applies to all intangible assets other than: [IAS 38.2-3]
· financial assets
· exploration and evaluation assets (extractive industries)
· expenditure on the development and extraction of minerals, oil, natural
gas, and similar resources
· intangible assets arising from insurance contracts issued by insurance
companies
· intangible assets covered by another IFRS, such as intangibles held for
sale, deferred tax assets, lease assets, assets arising from employee
benefits, and goodwill. Goodwill is covered by IFRS 3.
Key Definitions
Intangible asset: an identifiable nonmonetary asset without physical substance.
An asset is a resource that is controlled by the entity as a result of past events (for
example, purchase or self-creation) and from which future economic benefits
(inflows of cash or other assets) are expected. [IAS 38.8] Thus, the three critical
attributes of an intangible asset are: