IAS 38Chapter 4Lesson 1
The cost of a separately acquired intangible asset
Step 1 of 9Learning objectives
Go deeper+1 deeper insight · +2 calculations · +2 journal entries
A separately purchased intangible asset is recorded at cost: the purchase price net of discounts, non-refundable duties and taxes, and the costs directly attributable to preparing it for use. Advertising, training, general overheads and costs incurred once the asset is ready remain expenses. If payment is deferred beyond normal credit terms, cost is the cash price equivalent and the difference becomes interest expense.
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Learning objectives
- Identify the components of the cost of a separately acquired intangible asset: net purchase price, non-refundable duties and taxes, directly attributable costs.
- Distinguish costs that are capitalised from costs that are expensed (launch, training, general overheads, costs after the asset is ready).
- Calculate the cost of an acquisition and record the corresponding journal entry.
- Calculate the cash price equivalent of a deferred payment, then record the acquisition and the interest expense.