accounting for intangible assets

NZ IAS 38

New Zealand Equivalent to International Accounting Standard 38

Intangible Assets (NZ IAS 38)

Issued November 2004 and incorporates amendments up to December 2009

This Standard was issued by the Financial Reporting Standards Board of the New Zealand Institute of Chartered Accountants* and approved by the Accounting Standards Review Board in November 2004 under the Financial Reporting Act 1993. This Standard is a regulation for the purpose of the Regulations (Disallowance) Act 1989.

This Standard, on adoption, supersedes in part:

· Statement of Standard Accounting Practice No. 3: Accounting for Depreciation (SSAP-3); and

· Financial Reporting Standard No. 13: Accounting for Research and Development Activities(FRS-13).

The following New Zealand Interpretations refer to NZ IAS 38:

· NZ SIC-29 Service Concession Arrangements: Disclosures

· NZ SIC-32 Intangible Assets—Web Site Costs

· NZ IFRIC 4 Determining whether an Arrangement contains a Lease

· NZ IFRIC 12 Service Concession Arrangements

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* The New Zealand Institute of Chartered Accountants is the operating name of the Institute of Chartered Accountants of New Zealand, a body established under the Institute of Chartered Accountants of New Zealand Act 1996. All references to the New Zealand Institute of Chartered Accountants, or to the Institute, in this document mean the Institute of Chartered Accountants of New Zealand.

1 © Copyright

NZ IAS 38

COPYRIGHT

© Crown copyright 2006

This ASRB standard contains International Accounting Standards Committee Foundation copyright material. Reproduction within New Zealand in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgement of the source. Requests and inquiries concerning reproduction and rights for commercial purposes within New Zealand should be addressed to the Chairman, Accounting Standards Review Board, PO Box 12197, Wellington 6144.

All rights in this material outside of New Zealand are reserved by IASCF. Reproduction of ASRB standards outside of New Zealand in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside New Zealand should be addressed to the IASCF.

ISBN 1-877430-44-7

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NZ IAS 38

CONTENTS

NEW ZEALAND EQUIVALENT TO INTERNATIONAL ACCOUNTING STANDARD 38

INTANGIBLE ASSETS(NZ IAS 38)

Paragraphs

HISTORY OF AMENDMENTS

INTRODUCTION TO NZ IAS 38

OBJECTIVE

1

SCOPE

2–7

DEFINITIONS

8–17

Intangible assets

9–17

Identifiability

11–12

Control

13–16

Future economic benefits

17

RECOGNITION AND MEASUREMENT

18–67

Separate acquisition

25–32

Acquisition as part of a business combination

33–43

Measuring the fair value of an intangible asset acquired in a

business combination

35–41

Subsequent expenditure on an acquired in-process research

and development project

42–43

Acquisition by way of a government grant

44

Exchanges of assets

45–47

Internally generated goodwill

48–50

Internally generated intangible assets

51–67

Research phase

54–56

Development phase

57–64

Cost of an internally generated intangible asset

65–67

RECOGNITION OF AN EXPENSE

68–71

Past expenses not to be recognised as an asset

71

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NZ IAS 38

MEASUREMENT AFTER RECOGNITION

72–87

Cost model

74

Revaluation model

75–87

USEFUL LIFE

88–96

INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

97–106

Amortisation period and amortisation method

97–99

Residual value

100–103

Review of amortisation period and amortisation method

104–106

INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

107–110

Review of useful life assessment

109–110

RECOVERABILITY OF THE CARRYING AMOUNT—IMPAIRMENT

LOSSES

111

RETIREMENTS AND DISPOSALS

112–117

DISCLOSURE

118–128

General

118–123

Intangible assets measured after recognition using the

revaluation model

124–125

Research and development expenditure

126–127

Other information

128

TRANSITIONAL PROVISIONS AND EFFECTIVE DATE

129–132C

WITHDRAWAL OF IAS 38 (ISSUED 1998)

133

APPROVAL OF IAS 38 BY THE IASB

IASB BASIS FOR CONCLUSIONS

IASB DISSENTING OPINION

IASB ILLUSTRATIVE EXAMPLES

Assessing the useful lives of intangible assets

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NZ IAS 38

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New Zealand Equivalent to International Accounting Standard 38 Intangible Assets (NZ IAS 38) is set out in paragraphs 1–133. NZ IAS 38 is based on International Accounting Standard 38 Intangible Assets (IAS 38) (2004) initially issued by the International Accounting Standards Committee (IASC) and subsequently revised by the International Accounting Standards Board (IASB). All the paragraphs have equal authority but retain the IASC format of the Standard when it was adopted by the IASB. NZ IAS 38 should be read in the context of its objective and the IASB’s Basis for Conclusions on IAS 38, the New Zealand Preface and the New Zealand Equivalent to the IASB Framework for the Preparation and Presentation of Financial Statements (NZ Framework). NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errorsprovides a basis for selecting and applying accounting policies in theabsence of explicit guidance.

Any additional material is shown with grey shading. The paragraphs are denoted with “NZ” and identify the types of entities to which th e paragraphs apply.

This Standard uses the terminology adopted in International Financial Reporting Standards (IFRSs) to describe the financial statements and other elements. NZ IAS 1 Presentation of Financial Statements(as revised in 2007) paragraph 5 explains thatentities other than profit-oriented entities seeking to apply the Standard may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves. For example, profit/loss may be referred to as surplus/deficit and capital or share capital may be referred to as equity.

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