Chapter 10 INTANGIBLE NON-CURRENT ASSETS Learning Objectives Intangible non-current assets Deferred development costs Intangible non-current assets • Non-current assets which have a value to the entity but no physical substance • Examples: – Goodwill (see Chapter 19 on partnerships) – Leases – Patents and trade names – Research and development costs Deferred development costs IAS 38 Intangible assets • Pure or basic research • Applied research • Development expenditure can sometimes be capitalised under special circumstances All five criteria stated under IAS 38 must be fulfilled All costs written off as incurred Deferred development costs Five criteria stated under IAS 38 Intangible assets •Technical feasibility of completing the asset •Intention to complete the asset •Ability to use or sell the asset •Generate probable future economic benefits •Ability to measure the attributable expenditure Deferred development costs Capitalised development costs must be amortised systematically once commercial production begins Each project must be reviewed annually to ensure deferral is still appropriate •Amortisation: An intangible asset with an indefinite useful life is not amortised but should be reviewed each year for impairment •Impairment: Development costs should be written down where they are no longer likely to be recovered from future economic benefits Deferred development costs Disclosure • Method of amortisation used • Useful life of the assets or amortisation rate used • Gross carrying value, accumulated depreciation and accumulated impairment losses at beginning and end of period • Movements during the period • Carrying amount of internally-generated intangible assets ...Learning Objectives Intangible non- current assets Deferred development costs Intangible non- current assets • Non- current assets which have a value to the entity but no... Examples: – Goodwill (see Chapter 19 on partnerships) – Leases – Patents and trade names – Research and development costs Deferred development costs IAS 38 Intangible assets • Pure or basic research... costs written off as incurred Deferred development costs Five criteria stated under IAS 38 Intangible assets •Technical feasibility of completing the asset •Intention to complete the asset •Ability