There are several key changes in the convergence of Australian accounting
standards with international accounting standards for reporting periods
beginning on or after 1 January 2005 in the following:
1. Definition and Recognition of Intangible Asset
2. Research and Development
3. Internally Generated Assets
4. Valuation of Intangible Assets
5. Subsequent Expenditure
6. Residual Value
7. Useful Life
8. Amortization method
1. Definition and Recognition of Intangible Asset
International standard
IAS 38 - Intangible asset is defined as an identifiable non-monetary asset without physical substances.
It may be used in production or supply of goods or services, for rental or for administrative purposes.
It can be separated from the entity when it is sold, transferred, licensed, rented that makes future
economic benefit under contract or legal right..
IAS 38 – Intangible asset recognized at cost of acquisition if it can generate future economic benefit
and the cost of asset can be measured reliably.
Australian standard
There is no Australian accounting standard to define intangible asset.
- SAC4 includes the definition and recognition criteria for assets
- AASB 1015: Accounting for acquisition of assets,
- AASB 1010: Recoverable amount of non-current assets
- AASB 1041: Revaluation of non-current assets
- AASB 1021: Depreciation
Item with intangible nature may be included as assets in the financial statement if both the definition
and recognition criteria have been fulfilled.
Definition
‘Assets are future economic benefits controlled by the entity as a result of past transactions or other
past events’ (SAC, para 14)