Intangible Assets

According to NCRF 6, an intangible asset is an identified non-monetary asset without physical substance. And that must meet the following criteria to be recorded in the balance sheet:

Definition

Having no physical substance
Not being monetary
Be identifiable

Recognition criteria

Generate future benefits
Reliably measurable value

Fiscal Impact

“Expenses with development projects may be considered as a tax expense in the tax period in which they are incurred, even if the elements resulting from them are recognised as intangible assets in the financial statements of the taxpayers.” (nr. 1 of art. 32 of the CIRC).

Benefits

Enhancing the value of company assets (Account 44 on the Balance Sheet)
Greater balance sheet transparency
Establish direct comparisons between companies in the same sector
Increasing the company’s operational performance indicator
Increased competitiveness of the company through value creation potential
Reliable Tracking of projects developed through own resources
Substantiated measurement of internally generated value

Investigation Phase

No intangible assets resulting from research should be recognised in the balance sheet.

Research expenditure shall be recognised as an expense as soon as incurred.

Development Phase

Under NCRF 6 an intangible asset arising from development should be only if the entity can demonstrate the following:

Possess technical feasibility
Intention to use or sell the intangible asset
Capacity to use or sell the intangible asset
Generation of future economic benefits
Capacity to conclude the project
Ability to measure expenditure

Examples

Research Activities

Activities aimed at obtaining new knowledge;
The search for alternatives for materials, devices, products, processes, systems or services;
The formulation, design, evaluation and final selection of possible alternatives for new or improved materials, devices, products, processes, systems or services.

Development Activities

The design, construction and testing of prototypes and pre-production or pre-use models;
The design of tools, utensils, moulds and supports involving new technology;
The design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production;
The design, construction and testing of a chosen alternative for new or improved materials, devices, products, processes, systems or services.

Examples of directly attributable costs

Labour directly used in the production of the asset
The costs of materials and services used or consumed in generating the intangible asset
The costs of employee benefits associated with the formation of the intangible asset
The registration fees of a legal right
The amortization of patents and licenses that are used to generate the intangible asset

Search

Intangible Assets

Definition

Recognition criteria

Fiscal Impact