Chapter 6

Intangible Assets

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 Agenda

1. Applicable Standard and Scope

2. Meaning of Intangible Asset
3. Recognition and Measurement
4. Recognition of Internally Generated Intangible Assets
5. Recognition of an Expense
6. Measurement after Recognition
7. Useful Life
8. Intangible Asset with Finite Useful Life
9. Intangible Asset with Indefinite Useful Life
10. Impairment Loss
11. Retirement and Disposal
12. Disclosure
13. Service Concession Arrangements

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 1. Applicable Standard and Scope
• An entity is required to apply IAS 38 in
accounting for all its intangible assets, except
for:
1. intangible assets that are within the scope of
another accounting standard, for example,
intangible assets held for trading accounted for
under IAS 2 Inventories (see Chapter 9);
2. financial assets, as defined in IAS 39 Financial
Instruments: Recognition and Measurement; (see
Chapter 15)
3. the recognition and measurement of exploration
and evaluation assets under IFRS 6 Exploration
for and Evaluation of Mineral Resources; and
4. expenditure on the development and extraction of
minerals, oil, natural gas and similar non-
regenerative resources.

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 1. Applicable Standard and Scope
• Some intangible assets may be contained in or
attached with a physical substance.
• In determining whether these assets with both
intangible and tangible elements should be
accounted for under IAS 38 or under IAS 16
Property, Plant and Equipment (Chapter 3), an
entity uses judgement to assess and determine
which element is more significant.

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 2. Meaning of Intangible Asset
An intangible asset is
• an identifiable non-monetary asset without Identifiability
physical substance.
An asset is a resource:
Control
a) controlled by an entity as a result of past
events; and
b) from which future economic benefits are Future economic
expected to flow to the entity. benefit
Monetary assets are
• money held and assets to be received in fixed or
determined amounts of money

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 2. Meaning of Intangible Asset

More clarification on its meaning Identifiability

• An asset meets the Identifiability Criterion in

the definition of an intangible asset when it:
a) is separable
• i.e. is capable of being separated or divided
from the entity, and
• sold, transferred, licensed, rented or
exchanged, either individually or together
with a related contract, asset or liability; or
b) arises from contractual or other legal rights
• regardless of whether those rights are
transferable or separable from the entity or
from other rights and obligations.

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 2. Meaning of Intangible Asset
• An entity controls an asset if the entity has the
power Identifiability
– to obtain the future economic benefits flowing
from the underlying resource and
– to restrict the access of others to those Control
benefits.
• Its capacity to control such future economic
benefits would normally stem from legal rights
that are enforceable in a court of law.
• In normal situation, in the absence of legal
rights to protect, an entity usually has
insufficient control over the expected future
economic benefits arising from
– for example, a team of skilled staff, or customer Normally cannot
relationships and loyalty
meet the definition

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 2. Meaning of Intangible Asset
• The future economic benefits flowing from an
intangible asset may include Identifiability
– revenue from the sale of products or services,
– cost savings, or
Control
– other benefits resulting from the use of the asset
by the entity.
Future economic
• For example, the use of intellectual property in benefit
a production process
– may reduce future production costs
– rather than increase future revenues.

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 3. Recognition and Measurement

General principle
• The recognition of an item as an intangible asset
requires an entity to demonstrate that the item
meets:
a) the definition of an intangible asset (as
discussed); and
b) the recognition criteria

• This requirement applies to

– costs incurred initially to acquire or internally Implies both initial and
generate an intangible asset (i.e. initial cost) and subsequent costs with
– those incurred subsequently to add to, replace same recognition
part of, or service it (i.e. subsequent expenditure). criteria

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 3. Recognition and Measurement

Recognition criteria
• An intangible asset shall be recognised if, and only if:
a) it is probable that the expected future economic benefits that are
attributable to the asset will flow to the entity; and
b) the cost of the asset can be measured reliably.

• An entity shall assess the probability

– using reasonable and supportable assumptions that represent
management’s best estimate of the set of economic conditions
that will exist over the useful life of the asset

Initial measurement
• An intangible asset shall be measured initially at cost.

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 3. Recognition and Measurement

Recognition criteria Subsequent

Initial Cost
(capitalisation) for Expenditure
Old IAS 38 Criteria not • Probable that future • Probable that will enable
the same economic benefits that to generate future
are attributable to the economic benefits in
asset will flow to the excess of its originally
enterprise assessed standard of
• Cost measured reliably performance
• expenditure can be
measured and attributed
to the asset reliably.

In IAS 38 Same • Probable that the expected future economic benefits

criteria that are attributable to the asset will flow to the entity
• Cost measured reliably
Same criteria applied to both costs

Expenditure not fulfilling the recognition criteria will be charged to P/L

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 3. Recognition and Measurement

Intangible assets may arise from

1. Separate acquisition

2. Acquisition as part of a
business combination
3. Acquisition by way of a
government grant

4. Exchange of assets

5. Internally generated goodwill

6. Internally generated intangible

assets

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 3. Recognition and Measurement

1. Separate acquisition

• When an intangible asset is acquired separately, in

particular in the form of cash or other monetary
assets, the recognition criteria can be considered to
be satisfied.
• Since the price paid by the entity normally implies
that the criterion to have probable inflow of future
economic benefits can be fulfilled and the cost can
also be measured reliably.

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 3. Recognition and Measurement

1. Separate acquisition

More guidance is • The cost of a separately acquired intangible asset

given in IAS 38 comprises:
a) its purchase price,
including - import duties and
non-refundable purchase taxes,
after deducting - trade discounts and rebates;
and
b) any directly attributable cost of preparing the asset for
its intended use.

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 3. Recognition and Measurement

2. Acquisition as part of a
business combination

• When an intangible asset is acquired in a business combination, the

cost of the intangible asset is its fair value at the acquisition date as
required by IFRS 3 Business Combinations.
• A reliable measurement of the fair value of an intangible asset
acquired in a business combination becomes the most critical
criterion in recognising the intangible asset separately.
• If the fair value of the intangible asset can be measured reliably in a
business combination, it implies that the probability to have future
economic benefits from the asset can be satisfied.
• In consequence, even the intangible asset has not been recognised
by the acquiree, the acquirer has to recognise the intangible asset
from goodwill separately.

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 3. Recognition and Measurement

2. Acquisition as part of a
business combination

Some items, like in-process R&D project,

– that were ineligible for recognition in the acquiree’s books if it is generally
internally,
– may be recognised by the acquirer (separately from goodwill) in the business
combination if the item
• meets the definition of an intangible asset, and
• The asset’s fair value can be measured reliably.

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 3. Recognition and Measurement

2. Acquisition as part of a
1. Separate acquisition
business combination

Both may result in the recognition of an in-process R&D project

 But how should the subsequent expenditure on such acquired in-
process R&D project be recognised?

• Such research or development expenditure that is incurred after

the acquisition of that in-process R&D project shall be
accounted for
• in the same practice as other research or development expenditure
(or internally generated intangible assets),
i.e. the practice to
6. Internally generated intangible
be discussed later in 
assets

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 3. Recognition and Measurement

3. Acquisition by way of a
government grant

• In some cases, an intangible asset may be acquired free of

charge, or for nominal consideration, by way of a
government grant.
• In accordance with IAS 20 Accounting for Government
Grants and Disclosure of Government Assistance, an
entity may choose to
– recognise both the intangible asset and the grant
initially at fair value (in accordance with IAS 20), or
– recognises the asset initially at a nominal amount (the
other treatment permitted by IAS 20) plus any
expenditure that is directly attributable to preparing the
asset for its intended use.

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 3. Recognition and Measurement

4. Exchange of assets

• When an intangible asset is acquired in

exchange for an asset, the cost of such
intangible asset is measured at fair value unless
Commercial a) the exchange transaction lacks commercial
Substance substance or
Fair Value of b) the fair value of neither the asset received
Exchanged Asset nor the asset given up is reliably
measurable.
• Similar to the requirements in IAS 16 Property,
Plant and Equipment

• If the acquired item is not measured at fair value, its cost is

measured at the carrying amount of the asset given up.
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 3. Recognition and Measurement

5. Internally generated goodwill`

• In accordance with IAS 38, an entity is not allowed to

recognise internally generated goodwill as an asset.
• Because it is not an identifiable resource (i.e. it is not
separable nor does it arise from contractual or other
legal rights) controlled by the entity that can be
measured reliably at cost.

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 3. Recognition and Measurement

6. Internally generated intangible

assets

• When an entity applies the recognition criteria to evaluate whether an

internally generated intangible asset qualifies for recognition, there
are problems in:
1. identifying whether and when there is an identifiable asset that will
generate expected future economic benefits; and
2. determining the cost of the asset reliably.
• In consequence, in order to recognise internally generated intangible
asset as an asset, IAS 38 requires the asset to satisfy not only the
general recognition criteria for intangible asset, but also additional
requirements and guidance imposed on it.
• These additional requirements and guidance explained in next
session

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 3. Recognition and Measurement

• Even the recognition criteria are met,

– internally generated brands, mastheads, publishing
titles, customer lists and items similar in substance
 shall not be recognised as intangible assets.
• Specifically disallowed in IAS 38

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 4. Internally Generated Intangible Asset
• In order to determine whether an internally
generated intangible asset can be recognised
in accordance with IAS 38, an entity classifies
the generation process of the asset into:
1. a research phase; and
2. a development phase.

• Research is original and planned • Development is the application of

investigation undertaken with the research findings or other knowledge
prospect of gaining new scientific or to a plan or design for the production
technical knowledge and of new or substantially improved
understanding. materials, devices, products,
processes, systems or services
before the start of commercial
production or use.

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 4. Internally Generated Intangible Asset
• IAS 38 requires an entity to expense the expenditure on research or on
the research phase of an internal project when it is incurred.
– An entity cannot recognise nor capitalise any such expenditure or any
intangible asset arising from research or from the research phase of an
internal project as an intangible asset in the statement of financial position
– Because it is not possible for an entity to demonstrate that such expenditure
or such intangible asset will generate probable future economic benefits.
• Research is original and planned
investigation undertaken with the
prospect of gaining new scientific or
technical knowledge and
understanding.

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 4. Internally Generated Intangible Asset
• IAS 38 specifically requires that the entity is
required to recognise an intangible asset
arising from development or from the
development phase of an internal project if and
only if an entity can demonstrate all the six
specific recognition criteria

• Development is the application of

research findings or other knowledge
to a plan or design for the production
of new or substantially improved
materials, devices, products,
processes, systems or services
before the start of commercial
production or use.

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 4. Internally Generated Intangible Asset
• Six specific recognition criteria
1. the technical feasibility of completing the intangible asset so that it will be
available for use or sale.
2. its intention to complete the intangible asset and use or sell it.
3. its ability to use or sell the intangible asset.
4. how the intangible asset will generate probable future economic benefits.
(Among other things, the entity can demonstrate the existence of a market
for the output of the intangible asset or the intangible asset itself or, if it is
to be used internally, the usefulness of the intangible asset.
5. the availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
6. its ability to measure reliably the expenditure attributable to the intangible
asset during its development.

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 4. Internally Generated Intangible Asset
• The cost of an internally generated intangible asset
– is the sum of expenditure incurred from the date when the
intangible asset first meets the recognition criteria.
– prohibits reinstatement of expenditure previously recognised as an
expense.

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 4. Internally Generated Intangible Asset

When can the cost be capitalised?

Date 1 Date 2 Date 3

Research Development

Expensed and Capitalised as

cannot be restated intangible asset

Date 1 – Date of development commenced

Date 2 – Date of recognition criteria meet
Date 3 – Date of new developed product ready for
intended use
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 4. Internally Generated Intangible Asset
Example

• Melo Corp. incurred totally $2 million in researching and $10 million in

developing the new resources planning system in 2017.
• Melo demonstrated that the general recognition criteria and six specific
recognition criteria were met from 1 Nov. 2017.
• The expenditure incurred on the system after 1 Nov. 2017 was $3
million.
• Melo expected that the development should be completed within 2018
and the estimated expenditure to complete the system in 2018 should
be $5 million.
• While the general and specific recognition criteria were met from 1
Nov. 2017, Melo should charge a total of $ 9 million ($2 million + $7
million) to profit or loss and capitalise $3 million as internally generated
intangible asset in 2017.
• In 2018, while the expenditure has been incurred, further cost would be
added to the carrying amount of internally generated intangible asset.

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 5. Recognition of an Expense
• An entity is required to expense the expenditure on
an intangible item to profit or loss when it is
incurred unless:
1. It forms part of the cost of an intangible asset that
meets the general recognition criteria (Section 2.1)
and six specific recognition criteria (Section 4.2); or
2. The item is acquired in a business combination and
cannot be recognised as an intangible asset. Since
such expenditure forms part of the amount attributed
to goodwill at the acquisition date (see IFRS 3
Business Combinations).
• Even the above conditions can be fulfilled later,
expenditure on an intangible item that was initially
recognised as an expense cannot be recognised as
part of the cost of an intangible asset at a later
date.

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 6. Measurement after Recognition
• An entity shall choose either:

Cost Model

Revaluation Model

as its accounting policy

• If an intangible asset is accounted for using the revaluation model,
– all the other assets in its class shall also be accounted for using the same
model, unless there is no active market for those assets.

An active market is defined as a market in which transactions for the

asset or liability take place with sufficient frequency and volume to
provide pricing information on an on-going basis (see IFRS 13 Fair
Value Measurement, see Chapter 25) (Appendix A to IFRS 13).

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 6. Measurement after Recognition

Cost Model • After initial recognition, an intangible asset

shall be carried at
its cost less any accumulated depreciation
Revaluation Model and any accumulated impairment losses

• After initial recognition, an intangible asset shall be carried at a revalued

amount, being its fair value at the date of the revaluation, less any
subsequent accumulated amortisation and any subsequent accumulated
impairment losses.
• For the purpose of revaluations under IAS 38, fair value shall be
determined by reference to an active market.
• Revaluations shall be made with such regularity that at the end of the
reporting period the carrying amount of the asset does not differ materially
from its fair value.

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 6. Measurement after Recognition

Revaluation Model

Application of revaluation model

• The revaluation model does not allow:
a) the revaluation of intangible assets that have
not previously been recognised as assets; or
b) the initial recognition of intangible assets at
amounts other than cost.

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 6. Measurement after Recognition

Revaluation Model

Frequency of revaluations
• The frequency of revaluations depends on the
volatility of the fair values of the intangible assets
being revalued.
• If the fair value of a revalued asset differs materially
from its carrying amount, a further revaluation is
necessary.
– Some intangible assets may experience significant
and volatile movements in fair value, thus
necessitating annual revaluation.
– Such frequent revaluations are unnecessary for
intangible assets with only insignificant movements in
fair value.

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 6. Measurement after Recognition

Revaluation Model
Same as
IAS 16 PPE
Recognition of revaluation surplus or deficit
• If an intangible asset’s carrying amount is increased as a result of a
revaluation,
– the increase shall be credited to other comprehensive income and
accumulate it in equity under the heading of revaluation surplus.
– However, the increase shall be recognised in profit or loss to the extent that
it reverses a revaluation decrease of the same asset previously recognised
in profit or loss.
• If an intangible asset’s carrying amount is decreased as a result of a
revaluation,
– the decrease shall be recognised in profit or loss.
– However, the decrease shall be debited to other comprehensive income to
the extent of any credit balance existing in the revaluation surplus in
respect of that asset.
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 6. Measurement after Recognition

Revaluation Model

Realisation of revaluation surplus

• The cumulative revaluation surplus included in equity may be
transferred directly to retained earnings when the surplus is realised.
– The whole surplus may be realised on the retirement or disposal of the
intangible asset.
• However, some of the surplus may be realised as the asset is used by
an entity ……

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 6. Measurement after Recognition

Revaluation Model

Realisation of revaluation surplus

• In such case (surplus realised as the asset is used by an entity), the
amount of the surplus realised is the difference between
– amortisation based on the revalued carrying amount of the asset and
– amortisation that would have been recognised based on the asset’s
historical cost.
Dr Revaluation surplus
(amortisation based on the revalued carrying amount
less amortisation based on the asset’s historical cost)
Cr Retained earnings

• Transfers from revaluation surplus to retained earnings are not made

through profit or loss
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 7. Useful Life
• The measurement aft initial recognition for an intangible asset is based
on its useful life.
• Any entity has to assess whether the useful life of an intangible asset is:

Finite or Indefinite

If finite An intangible asset has an indefinite useful life

– the length of, or number when
of production or similar – based on an analysis of all of the relevant factors
units constituting, that – there is no foreseeable limit to the period over
useful life. which the asset is expected to generate net cash
inflows for the entity.
– “Indefinite” not the same as “infinite”

Amortisation required Amortisation not required

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 7. Useful Life
Example

• Bonnie Technology Group is reviewing the useful lives of its intangible

assets, including computer systems and patents on some technology
products.
• In view of the technological obsolescence and uncertainty, the CFO,
Tony Lam, proposes to use a more prudent approach in determining
the useful lives and believes the lives should be very short.

• Given the history of rapid changes in technology, computer software

and many other intangible assets are susceptible to technological
obsolescence.
• In consequence, it is likely that their useful lives are short.
• However, uncertainty only justifies estimating the useful life of an
intangible asset on a prudent basis, but it does not justify choosing a
life that is unrealistically short.

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 7. Useful Life
• To assess the useful life of an intangible asset, an entity can consider
the influence of:
– Planned future expenditure
– Contractual or other legal rights
– Renewal periods.

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 8. Intangible With Finite Useful Life

Amortisation
• The subsequent measurement of intangible assets with finite useful
lives is similar to that of property, plant and equipment (see Chapter 3).
• Amortisation required
– begins when the asset is available for use,
• i.e. when it is in the location and condition necessary for it to be capable
of operating in the manner intended by management.
– ceases at the earlier of
• the date that the asset is classified as held for sale (or included in a
disposal group held for sale) in accordance with IFRS 5 and
• the date that the asset is derecognised.

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 8. Intangible With Finite Useful Life

Amortisation

Amortisation Method

• The amortisation charge for each period is recognised in profit or loss

unless this or another Standard permits or requires it to be included in
the carrying amount of another asset. Say PPE or Inventories
• The amortisation method used shall reflect the pattern in which the
asset’s future economic benefits are expected to be consumed by the
entity.
– If that pattern cannot be determined reliably, the straight-line method shall
be used.

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 8. Intangible With Finite Useful Life
• The residual value is reviewed at least at Amortisation
each financial year-end.
– A change in the asset’s residual value is Amortisation Method
accounted for as a change in an accounting
estimate in accordance with IAS 8. Residual Value

• In addition, the amortisation period and the amortisation method for an

intangible asset with a finite useful life is reviewed at least at each
financial year-end.
– If the expected useful life of the asset is different from previous estimates,
the amortisation period shall be changed accordingly.
– If there has been a change in the expected pattern of consumption of the
future economic benefits embodied in the asset, the amortization method
shall be changed to reflect the changed pattern.
– Such changes shall be accounted for as changes in accounting estimates in
accordance with IAS 8.

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 9. Intangible With Indefinite Useful Life
• An intangible asset with an indefinite useful life is not subject to
amortisation,
– instead it is subject to at least an annual impairment testing.
• In accordance with IAS 36 Impairment of Assets, an entity is required to
test an intangible asset with an indefinite useful life for impairment by
comparing its recoverable amount with its carrying amount
1. Annually, and
2. Whenever there is an indication that the intangible asset may be
impaired.

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 9. Intangible With Indefinite Useful Life
• Each period, an entity is required to review the useful life of an
intangible asset that is not being amortised to determine whether events
and circumstances continue to support an indefinite useful life
assessment for that asset.
• If the events and circumstances do not continue to support the indefinite
useful life assessment, the entity is required to account for the effect of
the change from indefinite to finite useful life as a change in an
accounting estimate in accordance with IAS 8.
– A change from indefinite to finite useful life for an intangible asset is
an indicator that the asset may be impaired.
• In accordance with IAS 36, the asset should be tested for impairment by
comparing its recoverable amount with its carrying amount, and any
excess of the carrying amount over the recoverable amount should be
recognised as an impairment loss.

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 9. Intangible With Indefinite Useful Life
Example

• Madagascar Vision Inc. (MV) acquired a right in the agreement with the
Madagascar government to manage the import and export facilities at a
consideration of $20 million from 1 January 2014.
• MV, leveraged with its experience and reputation with the government,
has negotiated to amend the renewal term.
• MV will pay $20 million to the government on 1 January 2014 and, in
return, the expiry date of agreement will be extended from 31 March
2015 to 31 December 2016.
• MV can also renew the agreement term without limited frequency at
minimal cost only if MV complies with the government’s expected level
of performance.
• An international independent valuer has tendered a report to MV that,
based on its estimate, the cash flow from this amended agreement
would still be positive within the estimation horizon.
• Discuss the accounting implication to MV.

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 9. Intangible With Indefinite Useful Life
Example

• The intangible asset of MV will be carried at a cost of $40 million if the

amendment is finalised with the government.
• Since the renewal can be made indefinitely at minimal cost, and the
analysis of all relevant factors (supported by the valuer) demonstrates
no foreseeable limit to the period over which the asset is expected to
generate net cash inflows, the asset can be regarded as having
indefinite useful life.
• In consequence, the intangible asset would not be amortised until its
useful life is determined to be finite and it would only be tested for
impairment in accordance with IAS 36 annually and whenever there is
an indication that it may be impaired.

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 10. Impairment Loss
• An impairment loss is the amount by which the carrying amount of an
asset exceeds its recoverable amount.
• In addition to annual impairment assessment requirement applied to the
intangible asset with an indefinite useful life, an entity is also required to
apply the IAS 36 to determine whether an intangible asset is impaired.
• Chapter 8 further explains the requirements of impairment in
accordance with IAS 36.

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 11. Retirements and Disposal
• An intangible asset shall be derecognised:
a) on disposal; or
b) when no future economic benefits are expected
from its use or disposal.
• The gain or loss arising from the derecognition of an
intangible asset shall be determined as the
difference between the net disposal proceeds, if any,
and the carrying amount of the asset.
• It shall be recognised in profit or loss when the asset
is derecognised.
• Gains shall not be classified as revenue.

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 11. Retirements and Disposals

Replacement for part of an intangible asset

• An entity recognises in the carrying amount of an
asset the cost of a replacement for part of an
intangible asset, then it derecognises the carrying
amount of the replaced part.
• If it is not practicable to determine the carrying
amount of the replaced part, it may use the cost of
the replacement as an indication of what the cost of
the replaced part was at the time it was acquired or
internally generated.

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 12. Disclosures
• IAS 38 introduces some additional disclosure requirements
• Changes are mainly amendments for the changes on finite and
indefinite useful life
• Disclosures can be divided into disclosures for:
– General aspects for all intangible assets
– Intangible assets measured at revalued amount
– Research and development expenditure
– Other information

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 12. Disclosures

General aspects
An entity shall disclose the following for each class of
intangible assets, distinguishing between internally
generated intangible assets and other intangible assets:
a) whether the useful lives are indefinite or finite and, if finite,
the useful lives or the amortisation rates used;
b) the amortisation methods used for intangible assets with
finite useful lives;
c) the gross carrying amount and any accumulated
amortisation (aggregated with accumulated impairment
losses) at the beginning and end of the period;
d) the line item(s) of the statement of profit or loss and other
comprehensive income in which any amortisation of
intangible assets is included;
e) a reconciliation of the carrying amount at the beginning and
end of the period showing details of movements
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 12. Disclosures

General aspects
An entity shall also disclose:
a) for an intangible asset assessed as having an indefinite useful
life, the carrying amount of that asset and the reasons
supporting the assessment of an indefinite useful life.
In giving these reasons, the entity shall describe the factor(s)
that played a significant role in determining that the asset has
an indefinite useful life.
b) a description, the carrying amount and remaining amortisation
period of any individual material intangible asset.
c) the details for intangible assets acquired by way of a
government grant and initially recognised at fair value.
d) the existence and carrying amounts of intangible assets whose
title is restricted and the carrying amounts of intangible assets
pledged as security for liabilities.
e) the amount of contractual commitments for the acquisition of
intangible assets.

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 12. Disclosures

Intangible assets measured at revalued amount

• If intangible assets are accounted for at revalued
amounts, an entity shall disclose the following:
a) by class of intangible assets:
i) the effective date of the revaluation;
ii) the carrying amount of revalued intangible assets; and
iii) the carrying amount that would have been recognised
had the revalued class of intangible assets been
measured after recognition using the cost model;
b) the amount of the revaluation surplus that relates to
intangible assets at the beginning and end of the period,
indicating the changes during the period and any restrictions
on the distribution of the balance to shareholders; and
c) the methods and significant assumptions applied in
estimating the assets’ fair values.

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 12. Disclosures

Research and development expenditure

• An entity shall disclose the aggregate amount of research
and development expenditure recognised as an expense
during the period.

Other Information
• An entity is encouraged, but not required, to disclose the
following information:
a) a description of any fully amortised intangible asset that is
still in use; and
b) a brief description of significant intangible assets controlled
by the entity but not recognised as assets because they did
not meet the recognition criteria in IAS 38.

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 13. Service Concession Arrangement
• IFRIC 12 Service Concession Arrangements sets out general
principles on recognising and measuring the obligations and related
rights in service concession arrangements.
• SIC 29 Service Concession Arrangements: Disclosures sets out the
requirements for disclosing information about service concession
arrangements.
• IFRIC 12 specifies the accounting by operators, not by grantors and
covers the service concession arrangements if:
1. The grantor (for example the government) controls or regulates what
services the operator must provide with the infrastructure, to whom it
must provide them, and at what price; and
2. The grantor controls, for example through ownership, beneficial
entitlement or otherwise, any significant residual interest in the
infrastructure at the end of the term of the arrangement (IFRIC 12.5).

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 Chapter 6

Intangible Assets

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