Recognition of an intangible asset
IAS 38 generally requires probable future economic benefits attributable to the asset and a reliably measurable cost, in addition to the definition and other applicable rules. The source of the asset matters: research costs are expensed and internally generated development costs are recognised only when all specified criteria are demonstrated. Goodwill arising in a business combination is accounted for under IFRS 3 and is not an identifiable IAS 38 intangible asset.
Worked example
A company buys a separable patent for $60,000 and expects economic benefits from it. If the IAS 38 criteria are met, it recognises the $60,000 cost as an intangible asset, then applies finite- or indefinite-life requirements.
Common mistake
Listing purchased goodwill as an identifiable IAS 38 intangible asset, or capitalising all internally generated research expenditure.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |