Amendments to IAS38 Intangible Assets
Comments from ACCA
April 2003
The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the above exposure draft which has been considered by ACCA�s Financial Reporting Committee.
Question 1 � Identifiability
We agree with the guidance proposed for determining whether an asset meets the identifiability criterion in the definition of an intangible asset.
Question 2 � Criteria for recognising intangible assets acquired in a business combination separately from goodwill
We support the principle that separate intangible assets should be recognised where possible, rather than subsumed into goodwill. This helps to reduce the effect of problems noted in our comments on ED3 of either an arbitrary life for goodwill amortisation or of the subjective nature of some of the impairment testing.
We agree that an assembled workforce should not be recognised as an asset, but that acquired research and development could be.
The guidance in the appendix of illustrative examples to ED3 contains a number of possible intangible assets, some of which would not commonly be recognised at present. In our view this should not be thought of as a definitive list. For some of these possible intangible items there will be no reliable values. Some of these items might be better recognised and measured in combination with others; for example some of the customer related items - customer lists, non-contractual relationships and databases - where the future cash flows on which their values depend may be the same or very closely inter-related.
Question 3 � Indefinite useful life
We agree that the presumed maximum 20 year life should be removed.
Question 4 � Useful life of intangible asset arising from contractual or other legal rights
We agree with the proposals.
Question 5 � Non-amortisation of intangible assets with indefinite useful lives
The accounting for indefinite-life intangibles and for goodwill should be essentially the same. We would therefore extend the option for amortisation or for impairment only (see our answer to Question 8 on ED3) to indefinite-life intangible assets.