IAS38 - Intangible Assets

The new International Accounting Standard (IAS) 38 was issued in March 2004 and applied to the accounting for intangible assets from 31 March 2004.

An intangible asset is an asset that is not physical in nature.

Examples would include brand names or goodwill. Prior to the release of this new Accounting Standard, all intangible assets (including brand names) were listed as an asset on the balance sheet regardless of whether they were generated internally – made valuable by the business itself through effective marketing and market share (e.g. Coke brand) or a brand that had been bought by the business from another business.

Under the new standard IAS 38 an intangible asset will be initially recognised at cost if the following 3 conditions are met:

  1. The asset meets the definition of an intangible asset - identified and controlled by the business.
  2. It is probable that future economic benefits will flow to the business and
  3. The cost of the asset can be measured reliably.

If an intangible asset does not meet these three conditions then it cannot be recognised as an asset on the balance sheet of t...

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