IND AS – 38: Intangible Assets

IND AS – 38: INTANGIBLE ASSETS

MEANING

Intangible Asset are asset which are

Identifiable
Non- Monitory in nature
Without any physical substance
For example Patent, Trade Mark, Goodwill, copyright, Customer details etc. Intangible asset can be categorized into two parts as Intellectual property and Goodwill.

Intellectual property is something that which you create with the help of your mind such as design, plan, outline etc. and other companies cannot copy your intellectual property because it includes Trademark, patent and licensing agreement.

Goodwill is an asset which is created when a business obtain a strong position in its market. It measures various factors which affects our brand value example company’s reputation, strategies, employee relation and customer base.

Following are the list of Intangible Assets which are out of scope of Indian AS 38:-

Deferred Tax Asset
Investment as Plan Asset
Intangible Asset created under Business Combination
Mining & Extraction rights

RECOGNITION PRINCIPLE

Intangible Assets are recognized as asset if they qualify following conditions:

It is probable that Future Economic Benefit from asset will be flow to entity
AND
Cost of Intangible Asset can be reliably measured

SUBSEQUENT RECOGNITION

If any further expenditure is incurred on Intangible asset then it will also be capitalized only if it meets Recognition Principle discussed as above.

CALCULATION OF INTANGIBLE ASSET COST WHEN PURCAHSED

In Rs.
Purchase Price	XXX
Less: Trade Discount/ Rebate	XXX
Net Purchase Price	XXX
Add: Taxes on Purchase non-refundable	XXX
Add: Professional Fees for Acquisition	XXX
Add: Valuation Cost	XXX
Total Cost	XXX

CAPITALISATION

ASSET	CAPITALISATION COST	USEFUL LIVES
Computer Software	More than Rs.100 Lacs	10 years
Computer Software	Rs.10 Lac to Rs. 100 Lacs	5 years
Websites	Rs. 100000	3 years
License & Permits	Rs. 100000	Used shorter estimated useful life. If life is indefinite then we do not amortize
Patents	Rs. 100000	Used shorter estimated useful life. If life is indefinite then we do not amortize
Copyrights & Trademark	Rs. 100000	Used shorter estimated useful life. If life is indefinite then we do not amortize
Natural Resources & Extraction	Rs. 100000	Used shorter estimated useful life. If life is indefinite then we do not amortize
Other Intangible Assets	Rs. 100000	Used shorter estimated useful life. If life is indefinite then we do not amortize

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