In: Accounting
Short answer questions
Assume you are the financial controller of a new established company. The CEO has asked your choice of accounting policy regarding the measurement of intangible assets at the time of recognition and after the acquisition.
Required:
State your choice of accounting policy regarding the measurement of intangible assets at the time of recognition and after the initial acquisition. Explain the reason (s) of your choice (s). You should provide comments regarding the choice of accounting method.
It requires an entity to recognise an intangible asset, whether purchased or self-created (at cost) if only -it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably.This requirement applies whether an intangible asset is acquired externally or generated internally. IAS 38 includes additional recognition criteria for internally generated intangible assets.
Intangible assets, which are non-monetary assets which are without physical substance and identifiable ,either being separable or arising from contractual or other legal rights. Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives ,unless the asset has an indefinite useful life, in which case it is not amortised.