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

Zenith Retail Ltd develops its own web site, which customers will access to place orders. Under the Appendix to Ind AS 38 on web site costs, how is such a web site that arises from development classified?

An entity's own web site arising from development, whether for internal or external access, is an internally generated intangible asset. It is therefore subject to the requirements of Ind AS 38, rather than being treated as inventory or tangible property, plant and equipment.

  1. AAn internally generated intangible asset subject to the requirements of Ind AS 38Correct
  2. BA tangible asset to be accounted for under Ind AS 16
  3. CInventory held for sale under Ind AS 2
  4. DAn item of expense that can never be capitalised

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. It is not inventory because it is not held for sale, and it is not automatically expensed.

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