Definition of intangible asset
They are identifiable non-monetary assets, without physical substance that will generate future economic benefits controlled by the entity.
If the above requirements are not met, then we are in the presence of an expense or advance payment, which will be recognized in expenses as accrued.
Terminology
Goodwill. It is the excess of the consideration over the fair or specific value of the “net assets acquired”.
Development
It is the application of the results found in research and / or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services prior to the start of production or commercial use. It includes the design and testing of alternative products, the construction of prototypes and the operation of pilot plants. It does not include routine modifications to current products, production lines, manufacturing processes, and other ongoing operations, even though such modifications represent improvements; neither does it include market research or market testing activities.
Terminology
Investigation. It is a particular and planned search that has the purpose of acquiring new scientific or technical knowledge, with the expectation that it will be useful to develop a new product or service, a new process or technique that allows achieving a significant improvement of an existing product or process.
Impairment loss. It is the amount by which the future economic benefits (recoverable amount) of intangible assets are less than their “net book value”.
Net book value. It is the net balance of the intangible asset, after deducting the accumulated amortization and, where appropriate, adjusted for the net impairment losses of its accumulated reversals, which refer to it.
Terminology
Fair value Represents the amount of cash or equivalents for which an intangible asset can be exchanged between informed, interested and willing parties in a free competitive market.
Future economic benefits. The reasonably expected future economic benefits to flow from an intangible asset may be present in income from the sale of products or the provision of services, cost savings or other benefits resulting from the use of the asset by the entity, such as an increase in income. productivity.
Cost of acquisition of intangible assets
- Individually purchased. Cash or cash equivalent paid to acquire it From the acquisition of a business. At the fair value of each identifiable intangible asset Internally generated (development phase) Expenditures made for its development.
Acquisition of a government concession
This can occur when a government transfers or assigns to an entity intangible assets such as landing rights at airports, usufruct rights of communication and transport routes, licenses to operate radio or television stations, import licenses, concessions on mining properties, rights to exploit timber forests or rights to access other resources restricted to third parties.
Government grants at no cost to the entity should not be recognized as an intangible asset and should only be disclosed.
Government concessions at a cost to the entity should be recognized as an intangible asset, provided they meet the requirements of paragraph 21.
Research phase (charge to ordinary expenses) Some examples of activities included in research are:
- activities aimed at obtaining new knowledge; the search, evaluation and final selection of applications of the research findings or other knowledge; the search for alternatives for other materials, tools, products, processes, systems or services; and the formulation, design, evaluation and final selection of possible alternatives for improvements to new or improved materials, tools, products, processes, systems or services.
Development phase (charge to intangible assets)
Some examples of activities typically included in the development phase are:
- The design, construction and testing of pre-production models and testing of prototypes and models; The design and manufacture of tools, templates, molds, dies and dies that involve new technology; The design, construction and operation of a pilot plant that is of a economically feasible scale for commercial production; yThe design, construction and testing of new or improved materials, tools, products, processes, systems or services.
Internal costs that are not intangible assets (Expenses)
- Engineering supervision in an early phase of commercial production; Quality control during commercial production, including routine testing of products; Repair of faults related to problems during commercial production; Routine efforts to fine-tune, enrich or otherwise improve the quality of an existing product; The adaptation of an existing capacity to a particular requirement or the need of a customer as part of an ongoing business activity; Internal costs that are not intangible assets (Expenses) Seasonal design changes or other periodic changes to existing products; Routine design of tools, jigs, molds, and dies; Construction design and engineering activities related to construction, relocation, rehabilitation,start-up of facilities or equipment, other than facilities or equipment used solely for a particular research and development project.
Items, such as brands, trade names, publication titles, customer lists and the like in substance, that have been generated internally should not be recognized as intangible assets.
Disbursements in preoperative stages
They are those that are incurred during the beginning stage of a commercial, production or service entity, since it dedicates most of its activities to establishing a new business; It is also applicable to entities already in operation that adopt a new line of business or substantial expansion of their capacity, before starting their activities commercially.
In practice, various terms are used to refer to costs in the pre-operational stage, such as pre-opening costs, start-up costs and organization costs.
Identifiable pre-operating costs must be recognized following what is indicated in research and development costs (p. 69 Nic-38).
Past expenses that are not recognized as an asset
The expenditure on an intangible item that was initially recognized as an expense by an entity should not be recognized as part of the cost of an intangible asset at a later date.
Amortization period
The amortizable amount of an intangible asset must be allocated on a systematic basis during its estimated useful life, unless it has an indefinite life (it is not amortized and its value must be subject to the regulatory provisions on impairment).
Residual value
The residual value of an intangible asset with a defined useful life should be considered equal to zero, unless:
- There is a commitment by a third party to acquire the asset at the end of its useful life; o There is an active market for the asset; and
i. The residual value can be determined by reference to the market;
ii. Such a market is likely to exist at the end of the asset's useful life.
Accounting treatment of goodwill
Impairment of goodwill
The goodwill of an acquired entity should not be amortized; However, since it is considered an intangible asset with an indefinite life, it must be subject to impairment tests, at least annually.
