What is Intangible Asset ?
- An identifiable non-monetary asset without physical substance (MFRS 138)
- The existence of such assets may be indicated by legal documents that describe their rights
- The entity has control over the intangibles
- It is expected that the future economic benefits will flow to the entity
Cost cannot be capitalized
- The costs relating to many internally generated intangible items cannot be capitalized and are expensed as incurred :
- Research cost
- Start up cost
- Training cost
- Advertising & Promotion
Useful life of Intangible Asset
- Assets can be applied in 2 ways :
| Useful life | Accounting treatment |
| Finite life | Amortization is the systematic allocation of the depreciation amount of an
intangible asset over its useful life |
| Indefinite life | Should be tested for impairment annually but not amortized |
