Unformatted text preview: is to be sold: capitalization (and
amortization) applies once technological feasibility is
established. Capitalization ceases when the product is
available for general release to customers. Similar rules apply
to certain elements of development costs for computer
software for internal use. Supra-National Accounting Organizations
IAS 38 requires an enterprise to recognize an intangible asset (at cost) if, and only if:
(a) it is probable that the future economic benefits that are attributable to the asset will flow
to the enterprise; and
(b) 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
If an intangible asset is No intangible asset from research should be recognized.
acquired separately, the cost Expenditure on research should be recognized as an expense
when it is incurred.
is the purchased price.
If an intangible asset is An intangible asset arising from development should be
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