Page 21 - 2018 Finac1 Test 3 Class Slides - 2. Intangible Assets

TEST 3 PREPARATION

Separate acquisition

• Examples of expenditures that are not part of the cost of an
intangible asset are:

• costs of introducing a new product or service (including advertising
and promotional costs);
• costs of conducting business in a new location or with a new class of
customer (including staff training costs); and

• administration and other general overhead costs. (IAS 38.29)

• Some operations occur in connection with the development

of an intangible asset, but are not necessary to bring the

asset to the condition necessary for it to be capable of
operating in the manner intended by management.

• Because incidental operations are not necessary to bring an asset to
the condition necessary for it to be capable in operating in the

manner intended by management, the income and related expenses
of incidental operations are recognised in profit or loss. (IAS 38.31)

• If payment for an intangible asset is deferred beyond normal
credit terms, its cost is the cash price equivalent. (IAS 38.32)

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