Discuss the Key Characteristic of an intangible asset and explain how intangible assets are initially measured...

Discuss the Key Characteristic of an intangible asset and explain how intangible assets are initially measured and whether the measurement differs depending on whether the assets are acquired in a business combination or internally generated by an entity.

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Expert Solution

The key Characteristic of an Intangible Asset is that it will not have any physical form and has a legal form it is identifiable separately from the other assets. To record an asset as an intangible asset it must be identifiable.The company must gain some value from the asset which means it has some future Economic benefits.

The measurement will differ depending on whether the assets are acquired in a business combination or internally generated by an entity.

Initial Recognition

1. If generated by entity

Research cost will be charged to Expenses.

After the technical feasibility for the use and sale has been established then the development cost will be capitalised.

2.If acquired in Business Combination

Recognised at cost as an Asset even if it is a research expense and any other subsequent expenditure is charged to expense.Technical feasibility for the use and sale has been established then Capitalised.

ekkarill92 answered 1 year ago

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