Page 30 - 2018 Finac1 Test 3 Class Slides - 2. Intangible Assets
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TEST 3 PREPARATION


            Recognition of an expense




            • Expenditure on an intangible item shall be recognised as an expense when
                it is incurred, unless:
                    • it forms part of the cost of an intangible asset that meets the recognition criteria;
                       or

                    • the item is acquired in a business combination and cannot be recognised as an
                       intangible asset, and thus forms part of goodwill. (IAS 38.68)


            • The following items are recognised as expenses:
                    • research costs

                    • expenditure on start-up activities unless the expenditure is included in the cost of
                       an item of property, plant and equipment (IAS 16). Start-up costs may consist of:

                    • establishment costs (legal and secretarial costs in establishing a legal entity);
                    • pre-opening costs (expenditure to open a new facility or business); and

                    • pre-operating costs (expenditure for starting new operations or launching new
                       products or processes).
                    • training costs
                    • advertising and promotional costs

                    • relocating or re-organising costs. (IAS 38.69)

            • Expenditure on an intangible item that was initially recognised as an
                expense shall not be recognised as part of the cost of an intangible asset
                at a later date. (IAS 38.71)


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