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Intangible Assets

  • 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
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