Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals SMS News Articles Highlights
        Home        
 
Extracts
Home List
← Previous Next →

Intangible Assets

Ind AS - 038 - Rules - B. Indian Accounting Standards (Ind AS) - Companies (Indian Accounting Standards) Rules, 2015 - Ind AS - 038 - Indian Accounting Standard (Ind AS) 38 (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Paragraphs in bold type indicate the main principles.) Objective 1 The objective of this Standard is to prescribe the accounting treatment for that are not dealt with specifically in another Standard. This Standar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Exploration for and Evaluation of Mineral Resources); and (d) expenditure on the development and extraction of minerals, oil, natural gas and similar non-regenerative resources. 3 If another Standard prescribes the accounting for a specific type of intangible asset, an entity applies that Standard instead of this Standard. For example, this Standard does not apply to: 8[(a) held by an entity for sale in the ordinary course of business (see Ind AS 2, Inventories).] (b) deferred tax assets (see In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ss Combinations). (g) deferred acquisition costs, and , arising from an insurer s contractual rights under insurance contracts within the scope of Ind AS 104, Insurance Contracts. Ind AS 104 sets out specific disclosure requirements for those deferred acquisition costs but not for those . Therefore, the disclosure requirements in this Standard apply to those . (h) non-current classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with Ind .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

treated under Ind AS 16, Property, Plant and Equipment, or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the relat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

case of a finance lease, the underlying asset may be either tangible or intangible. After initial recognition, a lessee accounts for an intangible asset held under a finance lease in accordance with this Standard. Rights under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights are excluded from the scope of Ind AS 17, and are within the scope of this Standard. 7 Exclusions from the scope of a Standard may occur if activities .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

other expenditure incurred (such as start-up costs), in extractive industries or by insurers. 7AA The amortisation method specified in this Standard does not apply to an entity that opts to amortise the arising from service concession arrangements in respect of toll roads recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS reporting period as per the exception given in paragraph D22 of Appendix D to Ind AS 101. Definitions 8 The follo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

thereon. Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction, or, when applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Indian Accounting Standards, eg Ind AS 102, Share-based Payment. Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Development is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (See Ind AS 113, Fair Value Measurement.) An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. An intangible asset is an identifiable non-monetary asset without physical substance. Monetary assets are money held and assets to be received in fixed or determinable amounts of money. Research is original and pla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

b) the number of production or similar units expected to be obtained from the asset by an entity. 9 Entities frequently expend resources, or incur liabilities, on the acquisition, development, maintenance or enhancement of intangible resources such as scientific or technical knowledge, design and implementation of new processes or systems, licences, intellectual property, market knowledge and trademarks (including brand names and publishing titles). Common examples of items encompassed by these .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

finition of an intangible asset, expenditure to acquire it or generate it internally is recognised as an expense when it is incurred. However, if the item is acquired in a business combination, it forms part of the goodwill recognised at the acquisition date (see paragraph 68). Identifiability 11 The definition of an intangible asset requires an intangible asset to be identifiable to distinguish it from goodwill. Goodwill recognised in a business combination is an asset representing the future e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or (b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. Control 13 An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

c benefits. An entity controls those benefits if, for example, the knowledge is protected by legal rights such as copyrights, a restraint of trade agreement (where permitted) or by a legal duty on employees to maintain confidentiality. 15 An entity may have a team of skilled staff and may be able to identify incremental staff skills leading to future economic benefits from training. The entity may also expect that the staff will continue to make their skills available to the entity. However, an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y have a portfolio of customers or a market share and expect that, because of its efforts in building customer relationships and loyalty, the customers will continue to trade with the entity. However, in the absence of legal rights to protect, or other ways to control, the relationships with customers or the loyalty of the customers to the entity, the entity usually has insufficient control over the expected economic benefits from customer relationships and loyalty for such items (eg portfolio o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat the customer relationships are separable, those customer relationships meet the definition of an intangible asset. Future economic benefits 17 The future economic benefits flowing from an intangible asset may include revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the entity. For example, the use of intellectual property in a production process may reduce future production costs rather than increase future revenues. Recogn .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

riteria to separately acquired , and paragraphs 33-43 deal with their application to acquired in a business combination. Paragraph 44 deals with the initial measurement of acquired by way of a government grant, paragraphs 45-47 with exchanges of , and paragraphs 48-50 with the treatment of internally generated goodwill. Paragraphs 51-67 deal with the initial recognition and measurement of internally generated . 20 The nature of is such that, in many cases, there are no additions to such an asset .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed after the initial recognition of an acquired intangible asset or after completion of an internally generated intangible asset-be recognised in the carrying amount of an asset. Consistently with paragraph 63, subsequent expenditure on brands, mastheads, publishing titles, customer lists and items similar in substance (whether externally acquired or internally generated) is always recognised in profit or loss as incurred. This is because such expenditure cannot be distinguished from expenditure .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

useful life of the asset. 23 An entity uses judgement to assess the degree of certainty attached to the flow of future economic benefits that are attributable to the use of the asset on the basis of the evidence available at the time of initial recognition, giving greater weight to external evidence. 24 An intangible asset shall be measured initially at cost. Separate acquisition 25 Normally, the price an entity pays to acquire separately an intangible asset will reflect expectations about the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cularly so when the purchase consideration is in the form of cash or other monetary assets. 27 The cost of a separately acquired intangible asset comprises: (a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; and (b) any directly attributable cost of preparing the asset for its intended use. 28 Examples of directly attributable costs are: (a) costs of employee benefits (as defined in Ind AS 19) arising directly from brin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aff training); and (c) administration and other general overhead costs. 30 Recognition of costs in the carrying amount of an intangible asset ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by management. Therefore, costs incurred in using or redeploying an intangible asset are not included in the carrying amount of that asset. For example, the following costs are not included in the carrying amount of an intangible asset: (a) costs in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evelopment activities. Because incidental operations are not necessary to bring an asset to the condition necessary for it to be capable of operating in the manner intended by management, the income and related expenses of incidental operations are recognised immediately in profit or loss, and included in their respective classifications of income and expense. 32 If payment for an intangible asset is deferred beyond normal credit terms, its cost is the cash price equivalent. The difference betwe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he acquisition date about the probability that the expected future economic benefits embodied in the asset will flow to the entity. In other words, the entity expects there to be an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. Therefore, the probability recognition criterion in paragraph 21(a) is always considered to be satisfied for acquired in business combinations. If an asset acquired in a business combination is separable or arises .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

usiness combination. This means that the acquirer recognises as an asset separately from goodwill an in-process research and development project of the acquiree if the project meets the definition of an intangible asset. An acquiree s in-process research and development project meets the definition of an intangible asset when it: (a) meets the definition of an asset; and (b) is identifiable, ie is separable or arises from contractual or other legal rights. Intangible asset acquired in a business .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rable, but only together with a related contract, identifiable asset or liability. In such cases, the acquirer recognises the intangible asset separately from goodwill, but together with the related item. 37 The acquirer may recognise a group of complementary as a single asset provided the individual assets have similar useful lives. For example, the terms brand and brand name are often used as synonym for trademarks and other marks. However, the former are general marketing terms that are typic .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

acquisition of that project shall be accounted for in accordance with paragraphs 54-62. 43 Applying the requirements in paragraphs 54-62 means that subsequent expenditure on an in-process research or development project acquired separately or in a business combination and recognised as an intangible asset is: (a) recognised as an expense when incurred if it is research expenditure; (b) recognised as an expense when incurred if it is development expenditure that does not satisfy the criteria for .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng rights, licences to operate radio or television stations, import licences or quotas or rights to access other restricted resources. In accordance with Ind AS 20, Accounting for Government Grants and Disclosure of Government Assistance, an entity recognises both the intangible asset and the grant initially at fair value. Exchanges of assets 45 One or more may be acquired in exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

set is not measured at fair value, its cost is measured at the carrying amount of the asset given up. 46 An entity determines whether an exchange transaction has commercial substance by considering the extent to which its future cash flows are expected to change as a result of the transaction. An exchange transaction has commercial substance if: (a) the configuration (ie risk, timing and amount) of the cash flows of the asset received differs from the configuration of the cash flows of the asset .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alyses may be clear without an entity having to perform detailed calculations. 47 Paragraph 21(b) specifies that a condition for the recognition of an intangible asset is that the cost of the asset can be measured reliably. The fair value of an intangible asset is reliably measurable if (a) the variability in the range of reasonable fair value measurements is not significant for that asset or (b) the probabilities of the various estimates within the range can be reasonably assessed and used when .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e asset that meets the recognition criteria in this Standard. Such expenditure is often described as contributing to internally generated goodwill. Internally generated goodwill is not recognised as an asset because it is not an identifiable resource (ie it is not separable nor does it arise from contractual or other legal rights) controlled by the entity that can be measured reliably at cost. 50 Differences between the fair value of an entity and the carrying amount of its identifiable net asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

some cases, the cost of generating an intangible asset internally cannot be distinguished from the cost of maintaining or enhancing the entity s internally generated goodwill or of running day-to-day operations. Therefore, in addition to complying with the general requirements for the recognition and initial measurement of an intangible asset, an entity applies the requirements and guidance in paragraphs 52-67 to all internally generated . 52 To assess whether an internally generated intangible .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it were incurred in the research phase only. Research phase 54 No intangible asset arising from research (or from the research phase of an internal project) shall be recognised. Expenditure on research (or on the research phase of an internal project) shall be recognised as an expense when it is incurred. 55 In the research phase of an internal project, an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits. Therefore, this expenditure .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ms or services. Development phase 57 An intangible asset arising from development (or from the development phase of an internal project) shall be recognised if, and only if, an entity can demonstrate all of the following: (a) the technical feasibility of completing the intangible asset so that it will be available for use or sale. (b) its intention to complete the intangible asset and use or sell it. (c) its ability to use or sell the intangible asset. (d) how the intangible asset will generate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

elopment. 58 In the development phase of an internal project, an entity can, in some instances, identify an intangible asset and demonstrate that the asset will generate probable future economic benefits. This is because the development phase of a project is further advanced than the research phase. 59 Examples of development activities are: (a) the design, construction and testing of pre-production or pre-use prototypes and models; (b) the design of tools, jigs, moulds and dies involving new te .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

airment of Assets. If the asset will generate economic benefits only in combination with other assets, the entity applies the concept of cash-generating units in Ind AS 36. 61 Availability of resources to complete, use and obtain the benefits from an intangible asset can be demonstrated by, for example, a business plan showing the technical, financial and other resources needed and the entity s ability to secure those resources. In some cases, an entity demonstrates the availability of external .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, publishing titles, customer lists and items similar in substance cannot be distinguished from the cost of developing the business as a whole. Therefore, such items are not recognised as . Cost of an internally generated intangible asset 65 The cost of an internally generated intangible asset for the purpose of paragraph 24 is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria in paragraphs 21, 22 and 57. Paragraph 71 prohibits reinstate .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tangible asset; (c) fees to register a legal right; and (d) amortisation of patents and licences that are used to generate the intangible asset. Ind AS 23 specifies criteria for the recognition of interest as an element of the cost of an internally generated intangible asset. 67 The following are not components of the cost of an internally generated intangible asset: (a) selling, administrative and other general overhead expenditure unless this expenditure can be directly attributed to preparing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at, at 1 December 20X5, the production process met the criteria for recognition as an intangible asset. The recoverable amount of the know-how embodied in the process (including future cash outflows to complete the process before it is available for use) is estimated to be ₹ 500. At the end of 20X5, the production process is recognised as an intangible asset at a cost of ₹ 100 (expenditure incurred since the date when the recognition criteria were met, ie 1 December 20X5). The ₹ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

77; 1,900. At the end of 20X6, the cost of the production process is ₹ 2,100 (Rs.100 expenditure recognised at the end of 20X5 plus ₹ 2,000 expenditure recognised in 20X6). The entity recognises an impairment loss of ₹ 200 to adjust the carrying amount of the process before impairment loss (Rs.2,100) to its recoverable amount (Rs.1,900). This impairment loss will be reversed in a subsequent period if the requirements for the reversal of an impairment loss in Ind AS 36 are met. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provide future economic benefits to an entity, but no intangible asset or other asset is acquired or created that can be recognised. In the case of the supply of goods, the entity recognises such expenditure as an expense when it has a right to access those goods. In the case of the supply of services, the entity recognises the expenditure as an expense when it receives the services. For example, expenditure on research is recognised as an expense when it is incurred (see paragraph 54), except w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s (ie pre-opening costs) or expenditures for starting new operations or launching new products or processes (ie pre-operating costs). (b) expenditure on training activities. (c) expenditure on advertising and promotional activities (including mail order catalogues). (d) expenditure on relocating or reorganising part or all of an entity. 69A An entity has a right to access goods when it owns them. Similarly, it has a right to access goods when they have been constructed by a supplier in accordanc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a right to access those goods. Similarly, paragraph 68 does not preclude an entity from recognising a prepayment as an asset when payment for services has been made in advance of the entity receiving those services. Past expenses not to be recognised as an asset 71 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. Measurement after recognition 72 An entity shall choose either the cost .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g of amounts in the financial statements representing a mixture of costs and values as at different dates. Cost model 74 After initial recognition, an intangible asset shall be carried at its cost less any accumulated amortisation and any accumulated impairment losses. Revaluation model 75 After initial recognition, an intangible asset shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated amortisation and any subsequent accumul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation model is applied after an asset has been initially recognised at cost. However, if only part of the cost of an intangible asset is recognised as an asset because the asset did not meet the criteria for recognition until part of the way through the process (see paragraph 65), the revaluation model may be applied to the whole of that asset. 78 It is uncommon for an active market to exist for an intangible asset, although this may happen. For example, in some jurisdictions, an active market m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

another. Moreover, prices are often not available to the public. 79 The frequency of revaluations depends on the volatility of the fair values of the being revalued. If the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is necessary. Some may experience significant and volatile movements in fair value, thus necessitating annual revaluation. Such frequent revaluations are unnecessary for with only insignificant movements in fair value. 80 When an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amortisation at the date of the revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after taking into account accumulated impairment losses; or (b) the accumulated amortisation is eliminated against the gross carrying amount of the asset. The amount of the adjustment of accumulated amortisation forms part of the increase or decrease in the carrying amount that is accounted for in accordance with paragraphs 85 and 86. 81 If an in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

subsequent accumulated impairment losses. 83 The fact that an active market no longer exists for a revalued intangible asset may indicate that the asset may be impaired and that it needs to be tested in accordance with Ind AS 36. 84 If the fair value of the asset can be measured by reference to an active market at a subsequent measurement date, the revaluation model is applied from that date. 85 If an intangible asset s carrying amount is increased as a result of a revaluation, the increase shal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the extent of any credit balance in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. 87 The cumulative revaluation surplus included in equity may be transferred directly to retained earnings when the surplus is realised. The whole surplus may be realised on the retirement or disposal of the asset. However, some of the surplus may be realised as the asset is u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction or similar units constituting, that useful life. An intangible asset shall be regarded by the entity as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity. 89 The accounting for an intangible asset is based on its useful life. An intangible asset with a finite useful life is amortised (see paragraphs 97-106), and an intangible ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

obsolescence; (d) the stability of the industry in which the asset operates and changes in the market demand for the products or services output from the asset; (e) expected actions by competitors or potential competitors; (f) the level of maintenance expenditure required to obtain the expected future economic benefits from the asset and the entity s ability and intention to reach such a level; (g) the period of control over the asset and legal or similar limits on the use of the asset, such as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ul life of an intangible asset is indefinite should not depend on planned future expenditure in excess of that required to maintain the asset at that standard of performance. 92 Given the history of rapid changes in technology, computer software and many other are susceptible to technological obsolescence. Therefore, it will often be the case that their useful life is short. Expected future reductions in the selling price of an item that was produced using an intangible asset could indicate the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s shall not exceed the period of the contractual or other legal rights, but may be shorter depending on the period over which the entity expects to use the asset. If the contractual or other legal rights are conveyed for a limited term that can be renewed, the useful life of the intangible asset shall include the renewal period(s) only if there is evidence to support renewal by the entity without significant cost. The useful life of a reacquired right recognised as an intangible asset in a busin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hese factors. 96 Existence of the following factors, among others, indicates that an entity would be able to renew the contractual or other legal rights without significant cost: (a) there is evidence, possibly based on experience, that the contractual or other legal rights will be renewed. If renewal is contingent upon the consent of a third party, this includes evidence that the third party will give its consent; (b) there is evidence that any conditions necessary to obtain renewal will be sat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

intangible asset with a finite useful life shall be allocated on a systematic basis over its useful life. Amortisation shall begin when the asset is available for use, ie when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation shall cease at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with Ind AS 105 and the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e used to allocate the depreciable amount of an asset on a systematic basis over its useful life. These methods include the straight-line method, the diminishing balance method and the units of production method. The method used is selected on the basis of the expected pattern of consumption of the expected future economic benefits embodied in the asset and is applied consistently from period to period, unless there is a change in the expected pattern of consumption of those future economic bene .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in sales volumes and prices. The price component of revenue may be affected by inflation, which has no bearing upon the way in which an asset is consumed. This presumption can be overcome only in the limited circumstances: (a) in which the intangible asset is expressed as a measure of revenue, as described in paragraph 98C; or (b) when it can be demonstrated that revenue and the consumption of the economic benefits of the intangible asset are highly correlated. 98B In choosing an appropriate amo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s the starting point for the identification of the appropriate basis of amortisation, but another basis may be applied if it more closely reflects the expected pattern of consumption of economic benefits. 98C In the circumstance in which the predominant limiting factor that is inherent in an intangible asset is the achievement of a revenue threshold, the revenue to be generated can be an appropriate basis for amortisation. For example, an entity could acquire a concession to explore and extract .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or example, a contract could allow operation of the toll road until the cumulative amount of tolls generated from operating the road reaches ₹ 100 million). In the case in which revenue has been established as the predominant limiting factor in the contract for the use of the intangible asset, the revenue that is to be generated might be an appropriate basis for amortising the intangible asset, provided that the contract specifies a fixed total amount of revenue to be generated on which am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ue of an intangible asset with a finite useful life shall be assumed to be zero unless: (a) there is a commitment by a third party to purchase the asset at the end of its useful life; or (b) there is an active market (as defined in Ind AS 113) for the asset and: (i) residual value can be determined by reference to that market; and (ii) it is probable that such a market will exist at the end of the asset s useful life. 101 The depreciable amount of an asset with a finite useful life is determined .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reviewed at least at each financial year-end. A change in the asset s residual value is accounted for as a change in an accounting estimate in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. 103 The residual value of an intangible asset may increase to an amount equal to or greater than the asset s carrying amount. If it does, the asset s amortisation charge is zero unless and until its residual value subsequently decreases to an amount below the asset .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ation method shall be changed to reflect the changed pattern. Such changes shall be accounted for as changes in accounting estimates in accordance with Ind AS 8. 105 During the life of an intangible asset, it may become apparent that the estimate of its useful life is inappropriate. For example, the recognition of an impairment loss may indicate that the amortisation period needs to be changed. 106 Over time, the pattern of future economic benefits expected to flow to an entity from an intangibl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

108 In accordance with Ind AS 36, an entity is required to test an intangible asset with an indefinite useful life for impairment by comparing its recoverable amount with its carrying amount (a) annually, and (b) whenever there is an indication that the intangible asset may be impaired. Review of useful life assessment 109 The useful life of an intangible asset that is not being amortised shall be reviewed each period to determine whether events and circumstances continue to support an indefini .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

th Ind AS 36, with its carrying amount, and recognising any excess of the carrying amount over the recoverable amount as an impairment loss. Recoverability of the carrying amount-impairment losses 111 To determine whether an intangible asset is impaired, an entity applies Ind AS 36. That Standard explains when and how an entity reviews the carrying amount of its assets, how it determines the recoverable amount of an asset and when it recognises or reverses an impairment loss. Retirements and dis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assified as revenue. 10[114 The disposal of an intangible asset may occur in a variety of ways (eg by sale, by entering into a finance lease, or by donation). The date of disposal of an intangible asset is the date that the recipient obtains control of that asset in accordance with the requirements for determining when a performance obligation is satisfied in Ind AS 115, Revenue from Contracts with Customers. Ind AS 17 applies to disposal by a sale and leaseback.] 115 If in accordance with the r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n a business combination, if the right is subsequently reissued (sold) to a third party, the related carrying amount, if any, shall be used in determining the gain or loss on reissue. 11[116 The amount of consideration to be included in the gain or loss arising from the derecognition of an intangible asset is determined in accordance with the requirements for determining the transaction price in paragraphs 47-72 of Ind AS 115. Subsequent changes to the estimated amount of the consideration inclu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng for each class of , distinguishing between internally generated and other : (a) whether the useful lives are indefinite or finite and, if finite, the useful lives or the amortisation rates used; (b) the amortisation methods used for with finite useful lives; (c) the gross carrying amount and any accumulated amortisation (aggregated with accumulated impairment losses) at the beginning and end of the period; (d) the line item(s) of the statement of profit and loss in which any amortisation of i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and 86 and from impairment losses recognised or reversed in other comprehensive income in accordance with Ind AS 36 (if any); (iv) impairment losses recognised in profit or loss during the period in accordance with Ind AS 36 (if any); (v) impairment losses reversed in profit or loss during the period in accordance with Ind AS 36 (if any); (vi) any amortisation recognised during the period; (vii) net exchange differences arising on the translation of the financial statements into the presentatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hts; (f) recipes, formulae, models, designs and prototypes; and (g) under development. The classes mentioned above are disaggregated (aggregated) into smaller (larger) classes if this results in more relevant information for the users of the financial statements. 120 An entity discloses information on impaired in accordance with Ind AS 36 in addition to the information required by paragraph 118(e)(iii)-(v). 121 Ind AS 8 requires an entity to disclose the nature and amount of a change in an accou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iving these reasons, the entity shall describe the factor(s) that played a significant role in determining that the asset has an indefinite useful life. (b) a description, the carrying amount and remaining amortisation period of any individual intangible asset that is material to the entity s financial statements. (c) for acquired by way of a government grant and initially recognised at fair value (see paragraph 44): (i) the fair value initially recognised for these assets; (ii) their carrying a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

paragraph 90. measured after recognition using the revaluation model 124 If are accounted for at revalued amounts, an entity shall disclose the following: a. by class of : (i) the effective date of the revaluation; (ii) the carrying amount of revalued ; and (iii) the carrying amount that would have been recognised had the revalued class of been measured after recognition using the cost model in paragraph 74;and b. the amount of the revaluation surplus that relates to at the beginning and end of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

egate amount of research and development expenditure recognised as an expense during the period. 127 Research and development expenditure comprises all expenditure that is directly attributable to research or development activities (see paragraphs 66 and 67 for guidance on the type of expenditure to be included for the purpose of the disclosure requirement in paragraph 126). Other information 128 An entity is encouraged, but not required, to disclose the following information: (a) a description .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

racts with Customers, paragraphs 3,114,116 and in Appendix A paragraph 6 are amended. An entity shall apply those amendments when it applies Ind AS 115.] Appendix A -Web Site Costs This appendix is an integral part of the Ind AS. Issue 1 An entity may incur internal expenditure on the development and operation of its own web site for internal or external access. A web site designed for external access may be used for various purposes such as to promote and advertise an entity s own products and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ame, purchasing and developing hardware and operating software, installing developed applications and stress testing. (c) Graphical Design Development - includes designing the appearance of web pages. (d) Content Development - includes creating, purchasing, preparing and uploading information, either textual or graphical in nature, on the web site before the completion of the web site s development. This information may either be stored in separate databases that are integrated into (or accessed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

subject to the requirements of Ind AS 38; and (b) the appropriate accounting treatment of such expenditure. 5 This Appendix does not apply to expenditure on purchasing, developing, and operating hardware (eg web servers, staging servers, production servers and Internet connections) of a web site. Such expenditure is accounted for under Ind AS 16. Additionally, when an entity incurs expenditure on an Internet service provider hosting the entity s web site, the expenditure is recognised as an exp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment or operation of a web site (or web site software) for sale to another entity. When a web site is leased under an operating lease, the lessor applies this Appendix. When a web site is leased under a finance lease, the lessee applies this Appendix after initial recognition of the leased asset.] Accounting Principles 7 An entity s own web site that arises from development and is for internal or external access is an internally generated intangible asset that is subject to the requirements of I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

S 38 when, for example, the web site is capable of generating revenues, including direct revenues from enabling orders to be placed. An entity is not able to demonstrate how a web site developed solely or primarily for promoting and advertising its own products and services will generate probable future economic benefits, and consequently all expenditure on developing such a web site shall be recognised as an expense when incurred. 9 Any internal expenditure on the development and operation of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nse when it is incurred. (b) the Application and Infrastructure Development stage, the Graphical Design stage and the Content Development stage, to the extent that content is developed for purposes other than to advertise and promote an entity s own products and services, are similar in nature to the development phase in paragraphs 57-64 of Ind AS 38. Expenditure incurred in these stages shall be included in the cost of a web site recognised as an intangible asset in accordance with paragraph 8 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

luded in the cost of development when this condition is met. However, in accordance with paragraph 71 of Ind AS 38, expenditure on an intangible item that was initially recognised as an expense in previous financial statements shall not be recognised as part of the cost of an intangible asset at a later date (eg if the costs of a copyright have been fully amortised, and the content is subsequently provided on a web site). (c) expenditure incurred in the Content Development stage, to the extent t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the digital photographs are displayed on the web site. (d) the Operating stage begins once development of a web site is complete. Expenditure incurred in this stage shall be recognised as an expense when it is incurred unless it meets the recognition criteria in paragraph 18 of Ind AS 38. 10 A web site that is recognised as an intangible asset under paragraph 8 of this Appendix shall be measured after initial recognition by applying the requirements of paragraphs 72-87 of Ind AS 38. The best e .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

115, Revenue from Contracts with Customers.] 3. Appendix C, Determining whether an Arrangement contains a Lease, contained in Ind AS 17, Leases. 4. Appendix B, Stripping Costs in the Production Phase of a Surface Mine, contained in Ind AS 16, Property, Plant and Equipment. Appendix 1 Note: This Appendix is not a part of the Indian Accounting Standard. The purpose of this Appendix is only to bring out the major differences, if any, between Indian Accounting Standard (Ind AS) 38 and the correspond .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ir value for recognising the intangible asset and grant in accordance with Ind AS 20. 16[2. Paragraphs 129 to 130J related to transitional provisions and effective date have not been included in Ind AS 38 as transitional provisions given in IAS 38 have not been given in Ind AS 38, since all transitional provisions related to Ind ASs, wherever considered appropriate, have been included in Ind AS 101, First-time Adoption of Indian Accounting Standards, corresponding to IFRS 1, First-time Adoption .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to scope out the entity that opts to amortise the arising from service concession arrangements in respect of toll roads recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS reporting period as per the exception given in paragraph D22 of Appendix D to Ind AS 101. 5 Following Paragraph numbers appear as Deleted in IAS 38. In order to maintain consistency with paragraph numbers of IAS 38, the paragraph number have been retained in Ind A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, " (a) held by an entity for sale in the ordinary course of business (see Ind AS 2, Inventories). " 2. Omitted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, " (i) assets arising from contracts with customers that are recognised in accordance with Ind AS 115, Revenue from Contracts with Customers. " 3. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, " 116 The amount of consideration to be included in the gain or loss arising from the derecognition of an intangible asset is determined in accordance with the requirements for determining the transaction price in paragraphs 47-72 of Ind AS 115. Subsequent changes to the estimated amount of the consideration included in the gain or loss shall be accounted for in accordance with the requirements for changes in the t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erating lease, the lessor applies this Appendix. When a web site is leased under a finance lease, the lessee applies this Appendix after initial recognition of the leased asset. " 6. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, "1. Appendix C, Service Concession Arrangements contained in Ind AS 115, Revenue from Contracts with Customers." 7. Substituted vide F. No. 01/01/2009-CL-V(Part) - Dated 30-3-2016 before it was read as, " 2. Ap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted vide F. No. 01/01/2009-CL-V(Part VI) - Dated 28-03-2018, w.e.f. 1st day of April, 2018, before it was read as, 3[114 The disposal of an intangible asset may occur in a variety of ways (eg by sale, by entering into a finance lease, or by donation). In determining the date of disposal of such an asset, an entity applies the criteria in Ind AS 18, Revenue, for recognising revenue from the sale of goods. Ind AS 17 applies to disposal by a sale and leaseback. ] 11. Substituted vide F. No. 01/01/2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.