What is an Intangible Asset?


What is an Intangible Asset?

In April 2001, the International Accounting Standards Board adopted IAS 38 on Intangible Assets which was originally issued by the International Accounting Standards Committee in September 1998. This standard replaced IAS 9 about Research and Development Costs which was issued in 1993. This standard also replaced Accounting for Research and Development Activities formerly published in July 1978.

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In March 2004, the board revised IAS 38 which considered the standard to be part of the first phase of its business combination project. In January 2008, the board amended IAS 38 which is considered part of the second phase of its business combination project. However, the board amended IAS 38 again to clarify the appropriate conditions to use the income-based amortization method which was held in May 2014.

Intangible assets are non-monetary assets and those assets can be identified without going through physical substance. These assets can only be identified if they are separable, can be sold, transferred, and licensed. Goodwill obtained from business has been recorded in accordance with IFRS 3 and is based on the scope of IAS 38. It can be said to be within the scope of IAS 38 if the goodwill is generated internally. However, it is not recognized as an asset because it is not classified as an identifiable resource. There is also an expenditure for an intangible item, then the right is recognized as an expense. is not considered an expense if the item meets the definition of an intangible asset.

Intangible assets are usually measured by the cost of initial acquisition. After that, the entity would normally measure the cost less the accumulated amortization on the intangible asset. If an intangible asset has a finite useful life, the asset will be amortized and must comply with impairment testing. As for intangible assets with an indefinite useful life, the assets will not be amortized but will be tested for impairment regularly every year. If the intangible asset is disposed of, the gain or loss on disposal is recorded in the income statement.




Foundation, I. F. R. S. (n.d.). IAS 38 Intangible Assets. IFRS. Retrieved September 17, 2021, from https://www.ifrs.org/issued-standards/list-of-standards/ias-38-intangible-assets/