Internally generated intangible asset — Accounting glossary

Distinguish the research and development phases. Research expenditure is expensed when incurred; development expenditure is capitalised only from the date all specified IAS 38 criteria are demonstrated, including technical feasibility, intention and ability to complete, probable future economic benefits, adequate resources and reliable measurement. Internally generated brands, customer lists and similar items are not recognised as intangible assets under the standard.

Worked example

A software project enters development and all IAS 38 criteria are demonstrated on 1 July. Eligible costs incurred after that date may be capitalised; research costs and earlier development costs already expensed are not reinstated.

Common mistake

Capitalising all research and development spending, or recognising internally generated customer lists merely because management believes they are valuable.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	FR	Direct	September 2026–June 2027
ACCA	SBR	Direct	September 2026–June 2027