Skip to content

CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Dhruv Software Ltd. holds software licences purchased as stock-in-trade, for resale to customers in its ordinary course of business. Which statement is correct under Ind AS 38?

Ind AS 38 does not apply, because it excludes intangible assets held for sale in the ordinary course of business. Such licences are dealt with under Ind AS 2 for inventory and Ind AS 115 for revenue, regardless of holding period or price.

  1. AInd AS 38 applies because licences are intangible
  2. BInd AS 38 does not apply to intangible assets held for sale in the ordinary course of business; Ind AS 2 and Ind AS 115 are relevantCorrect
  3. CInd AS 38 applies only if the licences are held beyond one year
  4. DInd AS 38 applies if the licences are sold below cost

Explanation

Ind AS 38 does not apply to intangible assets held by an entity for sale in the ordinary course of business, referring instead to Ind AS 2 and Ind AS 115. The holding period and selling price do not change this scope exclusion.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 38 Intangible Assets shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 38 Intangible AssetsFree diagnostic mock

More Ind AS 38 Intangible Assets questions