IND AS 38 - Markings
IND AS 38 - Markings
IIN
NDDA
ASS3
388
IIN
NTTA
ANNG
GIIB
BLLE
EAAS
SSSE
ETTS
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2Conditions Any D
1. DEFINITIONS It can be separately sold from
Goodlin other assets
ahu Identifiable It arises from a separate legal
If Purthased contract
enerated
Recognised Non-Monetary Asset d
He
ever INTANGIBLE Amounts
cognised ASSET Without Physical
production or supply of
It Substance
goods or services
entificeble
Indcand
metofIdentifiable for rental to others
Held for use in:
e
my for administrative
Trade Relables 5L monetary purposes
Asset
Non Monetary
i) IDENTIFIABLILITY Intangible Assets 101 Asset
An asset is identifiable if it is either:
a) SEPARABLE (i.e. it is capable of being separated from the entity and sold/ transferred
2. RECOGNITION CRITERIA
r
INTANGIBLE
•MEETS THE DEFINITION OF INTANGIBLE ASSET
ASSET
•PROBABLE FUTURE ECONOMIC BENEFITS, AND
RECOGNISED IF
•COSTS CAN BE MEASURED RELIABLY
AND ONLY IF:
3. MEASUREMENT
INITIAL MEASUREMENT
11
00 Hid INDAS 20
same like
same like Ind AS 16
IndAS 6 NOTE 1: COMPONENTS OF COST IF ASSET IS PURCHASED
Coloma yeast
NOTE 2: DEFERRED CONSIDERATION 2.22 2012200
If payment is deferred beyond normal credit terms, then the cost of PPE will be Cash
The difference between the cash price at recognition date and the total payment is
1st Pref: FV of Asset Given Up + Cash Paid (if any) Provided the transaction
OR FV of Asset Acquired, DOES NOT Lack
Commercial Substance*
whichever is more clearly evident
3rd Pref: If Fair Value Not Available OR if the Transaction lacks Commercial Substance, then
*A transaction lacks commercial substance is future cash flows (Risk, timing & Amount) are
NOT expected to change as a result of the transaction. (i.e. Cash flows from New Acquired
asset are going to be same as the Cash flows from the Old Transferred Asset)
Note:
When the fair value of both the asset given up and acquired is mentioned, it is presumed
that both the fair values are equally evident. In such a case, the fair value of the asset given
Intangible Assets acquired in business combination are recognised separately from Goodwill
O
EE irrespective of whether the asset had been recognised by the acquiree (i.e. seller) before
business combination.
leg Customer D B
If Intangible Assets are not separable from goodwill, then recognise the Intangible asset with
Eg recognise the Intangible Asset with the related item. leg logo tagline
(Eg. Two separable intangible assets are identified- a magazine’s publishing title and a
related subscriber database. The fair value of the publishing title cannot be reliably measured
as it cannot be sold without the database. Therefore, the two intangible assets are
MBIg
Internally Generated
Intangible Asset
SelfGenerated
Internally Generated
Other Than Goodwill
Goodwill
a) An intangible asset arising from development phase should be recognised if and only if, an
How the intangible asset will generate probable future economic benefits.
f
Availability of adequate resources like technical, financial or others to complete the
development.
Begins
Ability to reliably measure the expenditure during its development.
0 Ability
Thick 2Cand Recogn criteria 2cand completion 2 A's Availability
b) Cost of an internally generated asset to be capitalized
Includes Excludes
- Costs of materials & services consumed - Selling, Admin & General OHs
f
- Customer Lists Intangible Asset if it meets the
Phase are Definition and it is Identifiable
purchased - Publishing titles
theycan - Mastheads (Also Refer Note below)
berecorded as
costin thatcase
canbe measuredreliably
Note: After Recognising Acquired Research Project, company might incur expenses on the
said research project in 2 phases i.e. Research Phase and Development Phase. Expenditure
Rad project PK
Purchase
He self Dev cap
capitalise
SUBSEQUENT
MEASUREMENT
NOTE: Fair Value must be determined by reference to an active market. If active market is
not available, then revaluation model cannot be used and the asset will be carried at Cost
Model
REVALUATION MODEL
ii) Treatment of
i) Frequency iii) Revaluation to be iv) Treatment v) Transfer of
Accumulated
of applied to entire class of Revaluation Revaluation Surplus to
Amortization on
revaluation of Assets Gain & Loss Retained Earnings
date of Revaluation
i) FREQUENCY OF REVALUATION
When an intangible asset is revalued, the carrying amount of that asset is adjusted to the
revalued amount. At the date of the revaluation, the Intangible Asset is treated in one of
Treatment
Steps:
1. Find % Gain/Loss
Journal Entry
= Reval G/L ÷ Carrying Amt
1. Acc. Amortization A/c Dr.
2. Increase Acc Amortization and
To Asset A/c
Gross Block of Asset by above %
2. Asset A/c Dr.
3. Journal Entry
To Reval Gain A/c
Asset A/c Dr.
To Acc Amortization A/c
To Reval Gain A/c
If an Intangible Asset is revalued, the entire class to which that asset belongs shall be
revalued.
Exception: If no active market exists for an Intangible Asset in a class, then that particular
asset will be carried at Cost Model and remaining Intangible Assets in that class can be
TREATMENT OF
REVALUATION GAIN &
LOSS
Caution: The above Transfers will NOT take place through P&L
Most subsequent expenditure do not result in excess FEBs. Therefore, such expenditures are
charged to P&L
Start-up costs
6. AMORTIZATION
AMORTIZATION
Note:
1. Amortization of an intangible asset DOES NOT cease when the intangible asset is idle or no
longer used, unless the asset has been fully amortized or is classified as held for sale.
2. Intangible asset with indefinite useful life is not amortized but is tested for impairment
7. RESIDUAL VALUE
Residual Value of an Intangible Asset in most cases is always assumed to be ZERO UNLESS:
a) There is a commitment by a third party to purchase the asset at the end of its useful
life; OR
b) There is an active market available for the Intangible Asset & it is probable that such
If residual value exceeds carrying amount, then amortization value shall be zero.
8. USEFUL LIFE
The useful life shall NOT exceed the period of the contract, but it may be shorter depending
on the period over which the entity expects to use the asset.
If the contract is renewable, then the useful life of the intangible asset shall include the
renewed;
c) Cost of renewal is NOT significant compared to the FEBs expected to flow from renewal.
Amortization Method, Residual Value & Useful Life should be reviewed at each financial year
end.
10. IMPAIRMENT
Impairment testing and impairment losses are accounted as per Ind AS-36.
For an intangible asset with indefinite useful lives, an impairment review is required at least
ANNUALLY.
11. DERECOGNITION
i)Disposed
OR
Gain/Loss should be transferred to P&L, it should NOT be classified as Revenue i.e. it will be