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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Kaveri Retail Ltd develops its own web site for internal and external access, and it is not meant for sale to another entity. How does Ind AS 38 treat this web site?

An entity's own web site arising from development, whether for internal or external access, is an internally generated intangible asset. It is therefore subject to the requirements of Ind AS 38, and it is not inventory or property, plant and equipment.

  1. AIt is an internally generated intangible asset subject to the requirements of Ind AS 38Correct
  2. BIt is outside Ind AS 38 because web sites are always treated as inventory
  3. CIt is an item of property, plant and equipment under Ind AS 16 only
  4. DIt is always expensed because web sites can never be recognised as assets

Explanation

The Appendix on web site costs states that an entity's own web site that arises from development and is for internal or external access is an internally generated intangible asset subject to Ind AS 38. Treating it as inventory is wrong because it is not held for sale in the ordinary course of business.

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