ACCT3321 Lecture Notes - Lecture 3: Qantas, The Seller, The Purchase Price
CHAPTER 6
Intangible Assets
NATURE OF INTANGIBLE ASSETS
- E.g.:
oPlays, musical works, recipes, films, trademarks, royalties on books, patents,
package design…
- An identifiable non-monetary asset without physical substance
- There must be an asset – a resource controlled by an entity as a result of a past
event and from which future economic benefits are expected to flow to the entity
- An intangible asset must be:
oIdentifiable
The asset is separable
Separated from the entity
E.g. could sell, license, rent, exchange or transfer the asset
Good will is not separable
Relates to reliability of measurement
Investors can include their own valuations in assessing the
market price of the shares, but an entity cannot include
unreliable measures on a statement of financial position
The asset arises from contractual or other legal rights
oNon-monetary in nature
Monetary assets: Money held and assets to be received in fixed or
determinable amounts of money
oWithout physical substance
Physical substance relates to the ability to be able to see and touch an
asset
-Must meet all 3
RECOGNITION OF INTANGIBLE ASSETS
- It must meet the recognition criteria of:
oIt is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity
oThe cost of the asset can be reliably measured
- There are other intangible assets that can never be recognised, regardless of
whether they meet the recognition tests
oSpecific internally generated assets brands, customer lists…
oResearch costs outlays classified as being on research can never be
recognised
MEASUREMENT
- Must be measured initially at cost
- Cost:
oThe amount of cash or cash equivalents paid or the fair value of other
consideration given to acquire an asset at the time of its acquisition or
construction
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