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CMA Final · Corporate Financial Reporting · Intangible Assets (Ind AS 38)

Kaveri Softech Ltd develops web site software and sells it to other companies in the ordinary course of its business. How is this software treated for the purposes of Ind AS 38 and its web site costs Appendix?

Web site software developed for sale to another entity in the ordinary course of business is outside Ind AS 38 and the web site costs Appendix. It is dealt with under Ind AS 2 and Ind AS 115 instead.

  1. AIt is an internally generated intangible asset of Kaveri Softech under Ind AS 38
  2. BIt is outside Ind AS 38 and the Appendix because it is held for sale in the ordinary course of business, and Ind AS 2 and Ind AS 115 applyCorrect
  3. CIt is covered by the Appendix because it concerns web site development
  4. DIt is accounted for under Ind AS 38 only if the useful life is indefinite

Explanation

Ind AS 38 does not apply to intangible assets held for sale in the ordinary course of business (see Ind AS 2 and Ind AS 115). The Appendix likewise does not apply to expenditure on developing a web site or web site software for sale to another entity. The option placing it under the Appendix is wrong for this reason.

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