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Chapter 8

1.2 Recognition

The criteria to recognise an intangible asset in the financial statements as follows:

 it should meet the definition of an intangible asset,

 the cost of the asset can be reliably measured, and

 it is probable that future economic benefits will be received by the entity
from the asset’ (IAS 38, para 18).

If the above criteria can be established then initial recognition of an intangible asset
is always measured at cost. For subsequent measurement, IAS 38 does permit the
valuation model to be used. However, this is very rarely applicable as the required
criteria are very specific and so, to all intents and purposes, intangible assets are
accounted for using the cost model.

IAS 38 defines an intangible asset as ‘an identifiable non-monetary
asset without physical substance’ (IAS 38, para 8)

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