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

Veda Retail Ltd develops its own web site for internal and external access. Which treatment follows from Ind AS 38 and its Appendix on web site costs?

An entity's own web site arising from development, whether for internal or external access, is an internally generated intangible asset and falls under Ind AS 38. The Appendix excludes only web sites developed for sale to another entity or accounted for under Ind AS 116.

  1. AThe web site is outside Ind AS 38 because it is not sold to customers
  2. BThe web site arising from development is an internally generated intangible asset subject to Ind AS 38 requirementsCorrect
  3. CThe web site must always be expensed because it cannot be identified
  4. DThe web site is treated as property, plant and equipment under Ind AS 16

Explanation

The Appendix 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. The scope exclusion applies only to web sites held for sale to another entity or accounted for under Ind AS 116. So the 'not sold' reasoning in the first option is wrong.

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