International Accounting Standard 38
The International Accounting Standard 38 ( IAS 38 ) is an accounting standard of the International Accounting Standards Board (IASB), the accounting for intangible assets regulates. It is part of the International Accounting Standards .
Cover and approach
IAS 38 governs the accounting treatment of intangible assets ( english intangible assets ) of an enterprise. Intangible assets are defined in IAS 38 as non-monetary assets without physical substance that can be independently identified and over which the company has control and power of disposal. Further recognition requirements for an intangible asset are:
- The future benefit must be probable and
- it must be possible to reliably determine the costs.
Purchased goodwill is not considered an intangible asset , as it cannot be independently identified. Intangible assets that are available for sale do not fall under the regulations of IAS 38. Their accounting is regulated in IFRS 5 .
When purchasing intangible assets against payment, the above conditions for capitalization are considered to be fulfilled in the case of an individual acquisition . In the case of an acquisition as part of a company acquisition, it must be ensured that a reliable determination of the acquisition costs can be proven.
Examples of intangible assets to be capitalized are:
The following are explicitly excluded from activation:
- Research costs
- self-created brands and trademarks
- Customer lists
- self-generated goodwill
It is more difficult to prove the recognition requirements for internally generated intangible assets. The approach of self-provided research work is prohibited according to IAS 38, because in the research phase it cannot be proven whether the research work will bring a future economic benefit. Development services, however, are to be activated by the company. A common misunderstanding is that there is a right to choose to activate. Furthermore, a subsequent activation of costs is not permitted. The distinction between research and development services is made in IAS 38 as follows:
While research is to be understood as the planned, original search for new knowledge, development is the transfer of this knowledge into a plan or model for the production of new products, materials, processes, systems, etc. before the start of commercial use.
Examples of development activities are given in IAS 38:
- Development, construction and testing of prototypes before the start of production or use
- Development of tools, jigs, molds, etc. using new technologies
- Development, construction and operation of a pilot plant unsuitable for commercial use
- Development and testing of alternative, new or improved materials
The subsequent measurement of either the order the scheduled depreciation carried amortized cost or based on a reassessment to traffic values (fair value accounting). However, the market value or revaluation approach is only permissible if this value can be reliably determined, i.e. if the market value can be derived from an active market, which is rarely the case with intangible assets.
If the useful life of the intangible asset can be determined, the values are systematically depreciated over the useful life up to any residual value. If the useful life cannot be determined (not: unlimited), there is no scheduled depreciation. In this case, at least annually, a so-called impairment test ( impairment test ) perform. Regulations on the impairment test can be found in the standard IAS 36 . Intangible assets that are not yet in use (production phase) must also be subjected to an annual impairment test.
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