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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Nandi Software Ltd. is in the business of developing and selling software packages to customers in the ordinary course. A finance trainee proposes to apply Ind AS 38 to the software packages held for sale and to the web site Appendix to costs of a web site that the company builds for sale to another entity. Which statement is correct?

Ind AS 38 does not apply to intangible assets held for sale in the ordinary course of business; these fall under Ind AS 2 and Ind AS 115. The Web Site Costs Appendix similarly excludes web sites developed for sale to another entity.

  1. AInd AS 38 does not apply to intangible assets held for sale in the ordinary course of business, which are dealt with under Ind AS 2 and Ind AS 115Correct
  2. BInd AS 38 applies to all intangible assets without exception
  3. CInd AS 38 applies to such items only if they are not amortised
  4. DInd AS 38 applies, but only the measurement requirements, not the recognition requirements

Explanation

Ind AS 38 does not apply to intangible assets held by an entity for sale in the ordinary course of business, which are covered by Ind AS 2 and Ind AS 115. The Web Site Costs Appendix likewise does not apply to expenditure on a web site developed for sale to another entity. So applying Ind AS 38 to them is wrong.

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