ACCA Applied Knowledge · Financial Accounting · Intangible non-current assets and amortisation
Which of the following items must be recognised as an intangible asset under IAS 38 Intangible Assets?
The purchased patent is recognised as an intangible asset because it is identifiable, controlled, has a reliably measured cost and will bring future economic benefits. Internally generated brands, training and research costs are expensed under IAS 38.
- AA patent purchased from another company for $40,000 that is expected to generate future economic benefitsCorrect
- BCosts of staff training incurred to improve employee skills
- CAn internally generated brand name developed through advertising
- DExpenditure on a market research study into potential new products
Explanation
A purchased patent is identifiable, controlled by the entity and expected to generate future benefits, and its cost can be measured reliably, so it is recognised. Internally generated brands, training costs and research expenditure are expensed as incurred because they cannot be recognised as assets.
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