Question

Why do you think the accounting requirements for intangibles assets have become so strict?   Should all intangible assets be recognised? Provide examples to help explain your answer.

Answer 1

 

- A) an intangible asset should be recognised recognised ,if and only if:

1- it is probable that future economic benefit that are attributable to the Asset will flow to enterprise and

2- the cost of the Asset can be measured reliably

B)- an enterprise should assess the probability of future economic benefit using reasonable and supportable assumptions that represent best estimate of the set of economic conditions that will exist over the useful life of asset.

for example research and development cost " no intangible asset from research should be recognized in the research phase .

expanditure on research {or on the research phase of an internal project } should be recognized as an expense when it is incurred.

research cost -

~cost of activity aimed at obtaining new knowledge .

~ cost of the search for alternative for material, devices, product, process, system or services .

development cost /activity- in the development phase of a project ,an enterprise can ,in some instances , identify an intangible asset and demonstrate that future economic benefit from the asset are probable .this is because the development phase of project is further advanced than the research phase .

~ cost of design , constriconst and testing of pre -production or pre-packaged use prototype and model's.

~ cost of the design of tool , jigs , moulds and dies involving new technology.