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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Kaveri Retail Ltd. develops its own web site that customers and staff will access. It incurs costs on this development. How does Ind AS 38 characterise the web site?

An entity's own web site arising from development, for internal or external access, is an internally generated intangible asset. It is therefore subject to Ind AS 38 requirements, not Ind AS 16 or Ind AS 2, and is not automatically expensed.

  1. AAn internally generated intangible asset subject to the requirements of Ind AS 38Correct
  2. BA tangible asset covered by Ind AS 16 because it is software-driven
  3. CAn item always charged to profit or loss because web sites cannot be recognised
  4. DAn asset accounted for under Ind AS 2 as inventory

Explanation

The Appendix on web site costs says 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. It is not inventory and not PPE. It is not automatically expensed, because recognition depends on meeting the Standard's criteria.

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