Everything about IAS 38 intangible assets
What is the most valuable asset in the nowadays economy? No, it’s not oil, it’s not land, no it’s something that’s not tangible. If we would have to explain this to our ancestors, they would think that we are crazy. How can something that is in the physical world non-existent be the most valuable good in our economy? We are talking about data. And with the rise of data many challenges and changes occurred in the legal and accounting system. Can you imagine the task of the accountants to value intangible goods? After many discussions and debates on this topic the International Accounting Standards Committee had established the IAS 38 in September 1998. However only in April 2001 was the IAS 38 adopted by the International Standards Board.
What does the IAS 38 stand for?
Are you about to start your own business and is your business going to be dealing with for example computer software or apps? Then it is useful to understand what this means for your accounting structure. As mentioned before, the IAS 38 deals with intangible assets as such and why the IAS 38 was first invented was to prescribe the treatment within accounting for intangible assets which are not dealt with in any other standard. The IAS 38 however, only recognizes an intangible asset if the specified criteria are met. In the first place an intangible asset is an identifiable non-monetary asset without a physical substance. It is identifiable when it is separable or when it arises from legal or contractual rights. It does not apply when:
- It is an intangible asset which is within the scope of a different standard
- If it is a financial asset that is defined in IAS 32
- If the measurement and recognition of evaluation and exploration assets (see IFRS 6)
- If the expenditure on the extraction and development of non-regenerative resources such as minerals, oil, and natural gas.
With for example computer software it is important to judge it right. If the software is an integral part of the computer hardware it cannot be placed unter the IAS 38. Yet when the software can be operative on its own, it may be placed under this standard. Other things that this standard may apply to are:
- Expenditure on advertising
- Start-up
- Training
- Research and development activities
Because the research and development activities are directed to developing knowledge it can be placed under the IAS 38 even though physical elements may be used.
Why you should take a look at annualreporting.info
As a fresh entrepreneur or experienced businessperson, you probably understand the value of true information. In accounting this is especially applicable. At annualreporting.info they know and value this too and they also understand the difficulties that come with it. This is why they have developed a website containing all the information necessary for you to set up your account for your business. Now you know exactly what can and what cannot be placed under the IAS 38 standard. Do you wish to know more? Go to annualreporting.info. Good luck! hopefully you now know all about this topic and can do further research on your own.
