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CA Final · Financial Reporting · Ind AS 38 Intangible Assets

Veda Retail Ltd. is an Indian company that has built its own web site, which customers use to browse and order products. The site arises from development and is accessible to external users. Under the Appendix on Web Site Costs to Ind AS 38, how should the web site be treated?

Veda's own web site, arising from development and accessible internally or externally, is an internally generated intangible asset. It must therefore be accounted for under the requirements of Ind AS 38, not as inventory, property, plant and equipment, or an automatic expense.

  1. AAs an internally generated intangible asset subject to the requirements of Ind AS 38Correct
  2. BAs inventory under Ind AS 2, since it supports sales
  3. CAs property, plant and equipment under Ind AS 16, since it is a tangible platform
  4. DAs an expense in full, because internal or external access disqualifies a web site from recognition

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. Veda's site is therefore assessed under Ind AS 38 recognition criteria. Treating it as inventory is wrong because it is not held for sale.

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