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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