AF3110 Intermediate Accounting 1 Week 11 Intangible Assets and Goodwill.doc

AF3110 Intermediate Accounting 1 Week 11 Intangible Assets and Goodwill
Week 11
Intangible Assets and Goodwill
AF3110 Intermediate Accounting 1
2009/10 Semester 2
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Accounting Standards for Discussion
HKAS 38
Intangible Assets
HKFRS 3
binations
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Introduction
Definitions
Intangible asset
Identifiable non-ary asset without physical substance
ary asset
Money held and asset to be received in fixed or determinable amount of money
E3>.g. cash, accounts receivable
Identifiability
An asset is identifiable when it :
Is capable of being sold or transferred individually or bination with a related contract, asset or liability; or
Arises from contractual or other legal rights
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Examples of Intangible Assets
Patent
An exclusive right recognized by law to use, manufacture, or sell the patented product or process without interference or infringement by others
Trademark
A distinctive symbol, design, or logo associated with a business
Copyright
A form of protection given by law to authors of literary, musical, artistic and similar works
Franchise
An exclusive right to sell products or provide services, to use trademark purchased by franchisee from franchisor
Sources of Intangible Asset
Internally generated
Arise from operation of the firm
Not recognised except development expenses that meet the 6 criteria
Purchased
Recognised if recognition criteria are met
Granted
From government for right to carry on business, ., taxi, mining
Recognition depends on valuation or active market
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Initial Recognition
Recognition criteria
Probable that the future economic benefits attributable to the asset will flow to the enterprise
Cost of the asset can be measured reliably
Intangible assets should be measured at cost
If acquired as part of the acquisition of a business:
When cost ( value) can be reliably measured, capitalised at fair value
Failing the above condition, treated as part of goodwill (. not recognised sepa