There are a lot of important accounting standards one of which is IAS 38, which outlines the standards for recognizing, measuring, and disclosing intangible assets. This is valid for anyone with an interest in accounting, insurance, or taxation, whether they are students studying those fields, working professionals looking to brush up on their skills, or all three. Are you looking for a good source of information on IAS 38 and other accounting standards? Read on as we introduce you to this standard and a great source for this kind of information.
What is IAS 38?
IAS 38 specifies the standards for identifying and valuing intangible assets as well as the information that must be disclosed. All monetary or non-financial asset that is not physical in nature is regarded as an intangible asset. A separable asset or one that results from a contractual right or other legal right is one that can be identified. Business assets with no physical form are known as intangible assets.
Intangible assets come in two varieties: those that are externally generated and those that are purchased. Because the purchase price is capitalized in the same way as a tangible asset, the accounting treatment of acquired intangibles is simple. However, accounting for internally produced assets necessitates further consideration.
Some examples of intangible assets are:
- Goodwill
- Customer details
- Research and development
- Brand equity
- Licensing
- Intellectual property (Trademark and Copyrights, Patents, Trade Secrets)
IAS 38’s main goal is to specify how intangible assets should be treated in accounting when another standard does not deal with them specifically. According to IAS 38, an intangible asset should only be recognized if the following conditions are satisfied: (I) it is likely that the entity will get future economic benefits from the asset; and (ii) the cost of the asset can be accurately determined. IAS 38 divides a research and development project into a research phase and a development phase to make the identification of internally generated intangibles more apparent.
There is adequate information to determine the fair value of an intangible asset accurately if it is separable or results from contractual or other legal rights. An intangible asset acquired in a business combination may be separated but only with an associated contract, identifiable asset, or liability. In certain circumstances, the buyer recognizes the intangible asset alongside the relevant item rather than goodwill alone. A company is encouraged to reveal large intangible assets it controls but does not recognize as assets, as well as a brief description of any completely amortized intangible assets it still uses.
Where can you get more information about IAS 38?
Annual Reporting is a website that compiles and publicizes the most current information from the International Financial Reporting Standards (IFRS). It treats important IFRS updates including revenue recognition, leasing, and insurance accounting, making it fully current. The use of principles in practice is illustrated with thorough practical examples. It provides an IFRS manual that is simple to understand. Navigation through the website is made easy as each IFRS topic can be accessed through its own link in the header menu. Begin learning about IFRS and other accounting standards today by visiting their website at annualreporting.info