Essay and Problem-based Questions Assignment Help

(1a) In IAS 38 and ASSB 138 an intangible asset is an identifiable non-monetary asset without physical substance. In an entity they are the long-term resources which are valued from the entity (Dtf.vic.gov.au, 2019). To recognize any intangible asset there are two criteria to be full filled

1. It should fit the definition of intangible assets

• Identifiability – the asset is distinct from the entity
• Control – to have the complete control of an asset 
• Benefits – the asset will provide future economic benefits by revenue, cost-saving and other benefits from the use of assets 

1. It should fit the recognition criteria 

• Expected future economic benefits
• Cost of the asset can be measured reliably 

Intangible assets which are generated internally is difficult to assess for recognition as problems can be if the asset will generate expected future economic benefits and determining the cost of the asset reliably. Internally generated assets are classified into two classification research and development (Cpaaustralia.com.au, 2019).

Research is an original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. The Research phase is described as 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. 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 is recognised as an expense when it is incurred (Aasb.gov.au, 2019).

Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use. The development phase is described as an intangible asset arising from development (or from the development phase of an internal project) shall be recognised if the below criteria is met and will be recognised as the cost of an intangible asset

• The technical feasibility of completing the intangible asset so that it will be available for use or sale.
• Its intention to complete the intangible asset and use or sell it.
• Its ability to use or sell the intangible asset.
• How the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
• The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
• Its ability to measure reliably the expenditure attributable to the intangible asset during its development (Aasb.gov.au, 2019).