How is an intangible asset accounted for?

The accounting for an intangible asset is to record the asset as a long-term asset and amortize the asset over its useful life, along with regular impairment reviews. The accounting is essentially the same as for other types of fixed assets.

What is Intangible assets?

It is an asset which is identifiable, non-monetary without physical substance.

 Identifiable - can be separated when acquired
 Non-monetary - cannot convertible to cash easily
 Without physical substance - unable to touch

Example of intangible assets

 Patent
 Copyright
 Trademark
 Brand
 Software
 Franchise agreements

Recognition and measurement of Intangible Assets

1. Separate acquisition

Measured at cost at the acquisition date

Costs included:-

 Purchase price
 Import duties, non-refundable taxes, discount or rebate
 Any directly attributable cost of preparing the asset for its intended use

2. Acquired as part of a business combination

 Measured at fair value at the acquisition date

Measurement after Recognition

Cost model

Cost

Less: accumulated amortisation

Less: accumulated impairment losses

Amortisation Period

 Systematic basis over its useful life
 Amortisation begins when the intangible asset is available for use
 The amortisation charge shall be recognised as an expense

Amortisation Method

Straight-line method or
Amortisation method that reflects the pattern in which it expects to consume the asset’s future economic benefits

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