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

Sagar Digital Ltd licenses out software it holds purely for sale to customers in its ordinary course of business. Under the scope provisions of Ind AS 38, how is this software dealt with?

Ind AS 38 does not apply to intangible assets held by an entity for sale in the ordinary course of business. Such items are accounted for under Ind AS 2 and Ind AS 115, so the software here falls outside Ind AS 38.

  1. AInd AS 38 applies as it is an intangible asset
  2. BInd AS 38 does not apply to intangibles held for sale in the ordinary course of business; Ind AS 2 and Ind AS 115 applyCorrect
  3. CInd AS 38 applies only to the amortisation of such software
  4. DInd AS 116 governs it because it is licensed

Explanation

Ind 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 115. Ind AS 116 applies to leases of intangibles, not to software held for sale.

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