This accounting policy paper is based

on IPSAS 31 Intangible Assets and

IPSAS 5 Borrowing Costs, as adopted
by the Treasury of the Republic of
Cyprus.

Intangible
Assets

IPSAS Project Team

(by Yiota Michael)
The Treasury of the Republic of Cyprus

Date: 2 July 2018

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 TABLE OF CONTENTS

INTRODUCTION ................................................................................................................. 3
1.1 Preamble ..................................................................................................................... 3
1.2 Objectives .................................................................................................................... 3
1.3 Scope ........................................................................................................................... 4
1.4 Definitions ................................................................................................................... 5
GENERAL RULES ................................................................................................................6
2.1 Meeting The Definition Of An Intangible Asset ........................................................6
2.2 Classification of Software Cost .................................................................................. 7
RECOGNITION AND INITIAL MEASUREMENT ..................................................................8
3.1 General Recognition Criteria ......................................................................................8
3.2 Initial Measurement....................................................................................................8
3.3 Application Of Recognition Criteria And Initial Measurement ................................8
3.3.1 Separate Acquisition Of An Intangible Asset ....................................................8
3.3.2Acquisition of An Intangible Asset As Part Of An Acquisition ..........................9
3.3.3 Intangible Assets Acquired Through Non-Exchange Transactions ..............9
3.3.4 Exchanges Of Assets.......................................................................................9
3.3.5 Internally Generated Goodwill ..................................................................... 10
3.3.6 Internally Generated Intangible Assets ....................................................... 10
3.4 Accounting Treatment When Recognition Criteria Αre Νot Μet ...........................12
SUBSEQUENT MEASUREMENT....................................................................................... 13
4.1 Cost Model ................................................................................................................ 13
4.2 Revaluation Model.................................................................................................... 13
4.3 Useful Life ................................................................................................................. 14
4.3.1 Intangible Assets With Finite Useful Lives ...................................................... 15
4.3.2 Intangible Assets With Indefinite Useful Lives ........................................... 16
IMPAIRMENT ................................................................................................................... 16
RETIREMENTS AND DISPOSALS ..................................................................................... 16
DISCLOSURES ...................................................................................................................17
TRANSITIONAL PROVISIONS .......................................................................................... 19

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 EFFECTIVE DATE ............................................................................................................... 19
REFERENCES .................................................................................................................... 19
APPENDICES ..................................................................................................................... 20
Appendix 1: Intangible Assets Reconciliation Table (Indicative) .................................. 20
Appendix 2: Flow Chart Of Intangible Assets................................................................. 19

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 INTRODUCTION
1.1 PREAMBLE
IPSAS 31 Intangible Assets, defines intangible assets as:

An identifiable non-monetary asset without physical substance.

Even though intangible assets have no physical characteristics, they have value because of
the advantages or exclusive privileges and rights they provide to an entity. Entities
frequently expend resources, or incur liabilities, on the acquisition, development,
maintenance, or enhancement of intangible resources such as scientific or technical
knowledge, design and implementation of new processes, or systems, licences,
intellectual property and trademarks. The most common examples of items encompassed
by these broad headings are computer software, patents, copyrights, motion picture films,
list of users of a service, acquired fishing licences, acquired import quotas and relationships
with users of a service.

1.2 OBJECTIVES
The objective of this accounting policy is to prescribe the appropriate accounting
treatment and disclosures for intangible assets that are not dealt with specifically in any
other accounting policy. The aim of this policy is to provide technical accounting guidance
for the preparation of financial statements, so as to enable them to give a true and fair
view. The aforementioned policy is prepared following guidance from all relevant
International Public Sector Accounting Standards (IPSASs).

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 1.3 SCOPE
This accounting policy applies to the accounting treatment of all intangible assets in the
financial statements of the Republic of Cyprus and its consolidated entities, as these are
defined in the relevant accounting policy, except:

a) Intangible assets that are within the scope of another accounting policy;
b) Financial assets, as defined in the Accounting Policy on Financial Instruments;
c) The recognition and measurement of exploration and evaluation assets (i.e. mineral
resources);
d) Expenditure on the development and extraction of minerals, oil, natural gas and similar
non-regenerative resources;
e) Powers and rights conferred by legislation, a constitution, or by equivalent means;
f) Deferred tax assets (see Accounting Policy on Revenue from non-Exchange
Transactions, Taxes and Transfers);
If another accounting policy prescribes the accounting treatment for a specific type of
intangible asset, an entity applies that accounting policy instead of this policy. For instance
this accounting policy does not apply to:

a) Intangible assets held by an entity for sale in the ordinary course of operations
(Accounting Policies on Construction Contracts and Inventories shall be applied);
b) Leases that are within the scope of the Accounting Policy on Leases;
c) Assets arising from employee benefits (Accounting Policy on Employee Benefits
applies);
d) Financial assets as defined in the Accounting Policies on Financial Instruments and
financial assets’ recognition and measurement as described in Accounting Policies on
Separate Financial Statements, Consolidated Financial Statements and Investments in
Associates and Joint Ventures;
e) Recognition and initial measurement of service concession assets that are within the
scope of the Accounting Policy on Service Concession Assets: Grantor. However, this
Accounting Policy applies to the subsequent measurement and disclosure of such
assets; and
f) Goodwill (see Accounting Policy on Public Sector Combinations).

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 1.4 DEFINITIONS
Amortisation is the systematic allocation of the depreciable amount of an intangible asset
over its useful economic life.

Asset is a resource presently controlled by an entity as a result of a past event. A resource

is an item with service potential or the ability to generate economic benefits.

Carrying amount is the amount at which an asset is recognised after deducting any
accumulated amortisation and accumulated impairment losses.

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.

Intangible asset is an identifiable non-monetary asset without physical substance.

Monetary items are units of currency held and assets and liabilities to be received or paid
in a fixed or determinable number of units of currency.

Non-monetary items are items that are not monetary items.

Research is original and planned investigation undertaken with the prospect of gaining
new scientific or technical knowledge and understanding.

Useful life of an intangible asset is either:

a) The period over which an asset is expected to be available for use by an entity; or
b) The number of production or similar units expected to be obtained from the asset by
an entity.

Any other terms defined in other accounting policies that have been adopted by the
government of the Republic of Cyprus, have the meaning presented in these accounting
policies.

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 GENERAL RULES
2.1 MEETING THE DEFINITION OF AN INTANGIBLE ASSET
According to the definition provided in paragraph 1.1. Preamble, an item meets the
definition of an intangible asset, is identified based on all of the following:

Future economic
Control benefits or service
potential
Without
physical
substance
Non-
monetary

Identifiability

Identifiability

An asset is identifiable if it either:

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, identifiable asset or liability, regardless of whether the entity intends
to do so; or
b) Arises from binding arrangements (including rights from contracts or other legal
rights), regardless of whether those rights are transferable or separable from the
entity or from other rights and obligations.
Note: Even though the definition given requires an intangible asset to be identifiable to
distinguish it from goodwill, any goodwill recognised in an acquisition is an asset.
Control of an Asset
An entity controls an asset if the entity has the power to obtain the future economic
benefits or service potential flowing from the underlying resource and to restrict the
access of others to those benefits or that service potential. The capacity of an entity to
control would normally stem from legal rights that are enforceable in a court of law.
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Future Economic Benefits or Service Potential

The future economic benefits or service potential flowing from an asset may include
revenue from the sale of products or services, cost savings, or other benefits resulting
from the use of the asset by the entity.

2.2 CLASSIFICATION OF SOFTWARE COST

Computer software can be classified as either a tangible asset, i.e. property, plant and
equipment or an intangible asset, depending on the level of integration with the related
hardware.

In cases where software is an integral part of the related hardware, i.e. the hardware
cannot operate without the software, the software will be treated as property, plant and
equipment together with the related hardware already recognised, which will normally be
computer equipment, a laboratory computer equipment (e.g. computer hardware and
related operating systems are recognised under PPE). In such a case, the Accounting Policy
on Property, Plant and Equipment shall apply.

In cases where the software is not an integral part of the related hardware, i.e. the
hardware can operate without the software, an entity determines whether the asset
meets the definition and recognition criteria of an intangible asset, and if met, capitalise
the cost as an intangible asset (e.g. computer hardware and the FIMAS software, or other
software such as Microsoft Office, Excel etc.).

Table 1: Software Classification

Types of Software Initial Recognition

Recognised as part of Property, Plant and

Software integrated with Hardware
Equipment

Standalone software Recognised as intangible asset

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 RECOGNITION AND INITIAL MEASUREMENT
3.1 GENERAL RECOGNITION CRITERIA
An item that meets the definition of an intangible asset (as demonstrated in paragraph 2.1:
General Identification Rules) shall be recognised and reported in the Financial Statement
of the entity if, and only if, the following two recognition criteria are met:

a) It is probable that the expected future economic benefits or service potential that
are attributable to the asset will flow to the entity; and

b) The cost or fair value of the asset can be measured reliably.

An entity shall assess the probability of expected future economic benefits or service
potential 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.

3.2 INITIAL MEASUREMENT

An intangible asset shall be measured initially at cost. Where an intangible asset is acquired
through a non-exchange transaction, its initial cost at the date of acquisition, shall be
measured at its fair value as at on that date.

3.3 APPLICATION OF RECOGNITION CRITERIA AND INITIAL MEASUREMENT

3.3.1 SEPARATE ACQUISITION OF AN INTANGIBLE ASSET
Separately acquired intangible assets (e.g. a licence agreement etc.) shall be recognised at
cost, provided that the recognition criteria in paragraph 3.1 are fulfilled.

The cost of the separately acquired intangible assets comprises of:

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 (e.g. cost of
employee benefits and professional fees arising directly from bringing the asset to its
working condition and cost of testing whether the asset is functioning properly).

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When an intangible asset is in the condition necessary for it to be capable of operating in
the manner intended by management, then the recognition of any direct costs ceases.
In addition, the following costs are excluded:

a) Advertising and promotion costs, relocation expenses, administration and other

general overhead costs are excluded from the cost of the intangible asset and are
treated as expenses when they are incurred.
b) Borrowing costs are expensed off when they are incurred.
The future economic benefits or service potential are assumed in the case of separately
acquired intangible assets (while for internally generated intangible assets this should be
actively demonstrated, please see 3.3.6 below).

3.3.2 ACQUISITION OF AN INTANGIBLE ASSET AS PART OF AN ACQUISITION

According to the provisions of the Accounting Policy on Public Sector Combinations, the
cost of the intangible asset acquired in an acquisition is its fair value at the acquisition date,
provided that the recognition criteria in paragraph 3.1 above are fulfilled.
Additionally, an acquirer recognises at the acquisition date, separately from goodwill, an
intangible asset of the acquired operation, irrespective of whether the asset had been
recognised by the acquired operation before the acquisition. In such a case the acquirer
recognises an in-process research and development project of the acquired operation if
the project meets the definition of an intangible asset.
Subsequent expenditure on an acquired in-process research and development project
which has been recognised as an intangible asset and incurred after the acquisition date,
shall be accounted for in accordance with the provisions in paragraph 3.3.6 below,
concerning internally generated intangible assets.

3.3.3 INTANGIBLE ASSETS ACQUIRED THROUGH NON-EXCHANGE TRANSACTIONS

An intangible asset which has been acquired through a non-exchange transaction shall be
recorded at its fair value at the date it is acquired. Such items include transfers between
entities like airport landing rights, licenses to operate radio or television stations, import
licenses or quotas or rights to access other restricted resources.

3.3.4 EXCHANGES OF ASSETS

In cases where an intangible asset is acquired in exchange for a non-monetary asset(s) or
a combination of a non-monetary and monetary asset(s), then the acquired intangible
asset is measured at its fair value or at the given up asset’s fair value; unless the fair value
of neither the asset received nor the asset given up is reliably measurable. In such a case it
must be measured at the carrying amount of the given up asset(s).

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3.3.5 INTERNALLY GENERATED GOODWILL
An internally generated goodwill shall not be recognised as an intangible asset because it
is not an identifiable resource controlled by an entity that can be measured reliably, and it
does not arise from a binding arrangement.

3.3.6 INTERNALLY GENERATED INTANGIBLE ASSETS

Sometimes it is difficult to assess whether an internally generated intangible asset qualifies
for recognition due to problems in:

a) Identifying whether and when there is an identifiable asset that will generate expected
future economic benefits or service potential; and
b) Determining the cost of the asset reliably.
Nevertheless, in order to assess whether an internally intangible asset meets the criteria
for recognition, an entity classifies the generation of the asset into two phases:

a) Research phase
During the research phase an entity cannot demonstrate that an intangible asset exists
that will generate probable future economic benefits or service potential.
Consequently, this expenditure is recognised as an expense when it is incurred.

b) Development phase.
An entity shall recognise an internally generated intangible asset arising from the
development phase if, and only if all of the following criteria are demonstrated:
i) The technical feasibility of completing the intangible asset so that it will be available
for use or sale;
ii) Its intention to complete the intangible asset and use or sell it;
iii) Its ability to use or sell the intangible asset;
iv) How the intangible asset will generate probable future economic benefits or
service potential;
v) The availability of adequate technical, financial and other resources to complete
the development and to use or sell the intangible asset; and
vi) Its ability to measure reliably the expenditure attributable to the intangible asset
during its development.
In order to demonstrate how an intangible asset will generate probable future
economic benefits or service potential, an entity assesses the future economic benefit
or service potential to be received from the asset utilising the principles in the
Accounting Policy on Impairment of Cash and Non-Cash Generating Assets.

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 Internally generated brands, mastheads, publishing titles, lists of users of a service, and
items similar in substance shall not be recognised as intangible assets, because such
expenditure cannot be distinguished from expenditure to develop the entity’s
operations as a whole.

If an entity cannot distinguish the research phase from the development phase of an
internal project to create an intangible asset, the entity treats the expenditure on that
project as if it were incurred in the research phase only (i.e. as an expense).

Cost of an Internally Generated Intangible Asset

The cost of an internally generated intangible asset will be recognised from the day it
meets the specific recognition criteria. Any expenditure previously expensed cannot be
capitalised subsequently.

The cost of an internally generated intangible asset is the sum of the expenditure incurred
from the date when the intangible asset first meets the recognition criteria. It comprises
all directly attributable costs necessary to create, produce, and prepare the asset to be
capable of operating in the manner intended by management, such as:
a) Costs of materials and services used or consumed in generating the intangible asset;
b) Costs of employee benefits (as defined in Accounting Policy on Employee Benefits)
arising from the generation of the intangible asset;
c) Fees to register a legal right; and
d) Amortisation of patents and licenses that are used to generate the intangible asset.

The following costs are excluded:

a) Selling, administrative and other general overhead expenditure unless this
expenditure can be directly attributed to preparing the asset for use;
b) Identified inefficiencies and initial operating deficits incurred before the asset achieves
planned performance;
c) Expenditure on training staff to operate the asset; and
d) Borrowing costs that are expensed off when they are incurred.

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 3.4 ACCOUNTING TREATMENT WHEN RECOGNITION CRITERIA ΑRE ΝOT
ΜET
If an item within the scope of this accounting policy does not meet the definition of an
intangible asset, expenditure to acquire it or generate it internally is recognised as an
expense when it is incurred.

Expenditure on an intangible item shall be recognised as an expense when it is incurred

unless:

a) It forms part of the cost of an intangible asset that meets the recognition criteria, as
illustrated in paragraphs 3.1 General Recognition Criteria and 3.3 Application of
Recognition Criteria and Initial Measurement; or
b) The item is acquired in an acquisition and cannot be recognised as an intangible asset.
If this is the case, it forms part of the amount recognised as goodwill at the acquisition
date (see Accounting Policy on Public Sector Combinations).
Additionally, any expenditure on an intangible item that was initially recognised as an
expense under this Accounting Policy shall not be recognised as part of the cost of an
intangible asset at a later date.

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 SUBSEQUENT MEASUREMENT
4.1 COST MODEL
After initial recognition, an intangible asset shall be carried at its cost less any accumulated
amortisation and any accumulated impairment losses.

Accumulated
Amortisation
Cost / Fair Carrying
and
Value Amount
Impairment
Losses

Figure 1: Cost Model Equation

4.2 REVALUATION MODEL

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.
For revaluation purposes under this Accounting Policy, fair value shall be determined by
reference to an active market. Revaluations shall then be made with sufficient regularity,
within a period of maximum three to five years ensuring that at the reporting date the
carrying amount of the asset does not differ materially from its fair value. If the fair value
of a revalued asset differs materially from its carrying amount, further revaluation is
necessary.

Accumulated
Amortisation
Revalued Carrying
and
Amount Amount
Impairment
Losses

Figure 2: Revaluation Model Equation

When an intangible asset is revalued, the carrying amount of that asset is adjusted to the
revalued amount. At the date of the revaluation the gross carrying amount is adjusted in a
manner that is consistent with the revaluation of the carrying amount of the asset.

If an intangible asset in a class of revalued intangible assets cannot be revalued because

there is no active market for this asset, the asset shall be carried at its cost less any
accumulated amortisation and impairment losses. In case where an active market no
longer exists for a revalued asset this may indicate that the intangible asset may be
impaired.
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If an intangible asset’s carrying amount is increased as a result of a revaluation, the
increase shall be credited directly to revaluation surplus. However, the increase shall be
recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the
same asset previously recognised in surplus or deficit.

If an intangible asset's carrying amount is decreased as a result of a revaluation, the

decrease shall be recognised in surplus or deficit. However, the decrease shall be
recognised directly in net assets/equity to the extent of any credit balance in the
revaluation surplus in respect of that asset. The decrease recognised directly in net
assets/equity reduces the amount accumulated in net assets/equity under the heading of
revaluation surplus.

The provisions of paragraph 4.2 of this accounting policy, will remain inactive, until
further notification.

4.3 USEFUL LIFE

An entity shall assess whether the useful life of an intangible asset is finite or indefinite and,
if finite, the length of that useful life. An intangible asset shall be regarded by the entity as
having an indefinite useful life when, based on an analysis of all of the relevant factors,
there is no foreseeable limit to the period over which the asset is expected to generate
net cash inflows for, or provide service potential to, the entity.

The useful life of an intangible asset that arises from binding arrangements (including
rights from contracts or other legal rights) shall not exceed the period of the binding
arrangement (including rights from contracts or other legal rights), but may be shorter
depending on the period over which the entity expects to use the asset. If the binding
arrangements (including rights from contracts or other legal rights) are conveyed for a
limited term that can be renewed, the useful life of the intangible asset shall include the
renewal period(s) only if there is evidence to support renewal by the entity without
significant cost.

The useful life of:

a) A license or similar right previously granted by one combining operation to another
combining operation that is recognised by the resulting entity in an amalgamation; or
b) A reacquired right recognised as an intangible asset in an acquisition,
is the remaining period of the binding arrangement (including rights from contracts or
other legal rights) in which the right was granted and shall not include renewal periods.

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4.3.1 INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

Cost / Fair Residual Depreciable

Value Value Amount

Figure 3: Depreciable Amount Equation

a) Amortisation and Amortisation Method

1) The depreciable amount of an intangible asset with a finite useful life shall be
allocated on a systematic basis over its useful life.
2) Amortisation shall begin 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.
3) Amortisation shall cease at the date the asset is derecognised.
4) The amortisation method to be used is the straight-line method.
5) The amortisation charge for each period shall be recognised in surplus or deficit
unless this or another Accounting Policy permits or requires it to be included in the
carrying amount of another asset.

b) Residual value
The residual value of an intangible asset with a finite useful life shall be assumed to be
zero unless:
1) There is a commitment by a third party to acquire the asset at the end of its useful
life; or
2) There is an active market for the asset, and:
i) Residual value can be determined by reference to that market; and
ii) It is probable that such a market will exist at the end of the asset's useful life.

c) Review of Amortisation, Amortisation Method and Residual Value

The residual value, the amortisation period and the amortisation method of an
intangible asset shall be reviewed at least at each reporting date.
Any changes shall be accounted for as changes in accounting estimates in accordance
with the Accounting Policy on Accounting Policies, Changes in Accounting Estimates
and Errors.

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4.3.2 INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
An intangible asset is recognised as having an indefinite useful life when there is no
foreseeable limit to the period over which an asset is expected to generate net cash
inflows or service potential for the entity. This type of asset is very rare to find in practice.

Intangible assets with an indefinite useful life shall not be amortised.

The useful life of an intangible asset that is not being amortised shall be reviewed each
reporting period to determine whether events and circumstances continue to support an
indefinite useful life assessment for that asset. If they do not, the change in the useful life
assessment from indefinite to finite shall be accounted for as a change in an accounting
estimate in accordance with the Accounting Policy in Accounting Policies, Changes in
Accounting Estimates and Errors.

Intangible assets with indefinite useful life are subject to impairment review annually and
whenever there is an indication that the asset may be impaired.

IMPAIRMENT
To determine whether an intangible asset, either with finite or indefinite useful life, is
impaired, an entity applies the rules described in Accounting Policy on Impairment on Cash
Generating Assets and the Accounting Policy on Non-Cash Generating Assets. This
Accounting Policy explains when and how an entity reviews the carrying amount of its
assets, how it determines the recoverable service amount or recoverable amount of an
asset, as appropriate, and when it recognises or reverses an impairment loss.

RETIREMENTS AND DISPOSALS

An intangible asset shall be derecognised:

a) On disposal (including disposal through a non-exchange transaction); or

b) When no future economic benefits or service potential are expected from its use or
disposal.

The gain or loss arising from 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.
Any gain or loss arising from derecognition shall be recognised in surplus or deficit when
the asset is derecognised (unless Accounting Policy on Leases requires otherwise on a sale
and leaseback).

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 DISCLOSURES
General Disclosures
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 financial performance 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
(see Appendix 1):
i) Additions, indicating separately those from internal development and those
acquired separately;
ii) Assets classified as held for sale or included in a disposal group classified as held for
sale;
iii) Increases or decreases during the period resulting from revaluations under
paragraph 4.2 Revaluation Model (if any);
iv) Impairment losses recognised (or reversed) in surplus or deficit during the period
in accordance with Accounting Policy on Impairment of Cash and Non-Cash
Generating Assets (if any);
v) Any amortisation recognised during the period;
vi) Net exchange differences arising on the translation of the financial statements into
the presentation currency, and on the translation of a foreign operation into the
presentation currency of the entity; and
vii) Other changes in the carrying amount during the period.

Additional Disclosures
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.

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b) A description, the carrying amount, and remaining amortisation period of any
individual intangible asset that is material to the entity's financial statements.

c) For intangible assets acquired through a non-exchange transaction and initially

recognised at fair value:
i) The fair value initially recognised for these assets;
ii) Their carrying amount; and
iii) Whether they are measured after recognition under the cost model or the
revaluation model.

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.

Intangible Assets Measured after Recognition using the Revaluation Model

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 in 4.1 Cost
Model;

b) The amount of the revaluation surplus that relates to intangible assets at the beginning
and end of the reporting period, indicating the changes during the reporting period
and any restrictions on the distribution of the balance to owners; and

c) The methods and significant assumptions applied in estimating the asset’s fair values.

Research and Development Expenditure

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

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 TRANSITIONAL PROVISIONS
On first-time adoption of Accrual Accounting, an entity will be required to recognise all
intangible assets, except of internally generated intangible assets, at a deemed cost.

A first-time adopter shall measure the intangible assets at their fair value when reliable
cost information about the assets is not available, and use that fair value as the deemed
cost for intangible assets, other than internally generated intangible assets that meets the
recognition criteria in this Accounting Policy (excluding the reliable measurement
criterion).

An internally generated asset shall be recognised if it meets the definition of an intangible

asset and the recognition criteria in this Accounting Policy, including the costs occurred
for development of the specific asset previously written off.

EFFECTIVE DATE
This rule shall be effective for annual financial statements covering periods beginning on
or after 1 January 2023.

REFERENCES
This accounting policy is based on the following IPSAS standards:

IPSAS 31 Intangible Assets

IPSAS 5 Borrowing Costs

IPSAS 33 First – Time Adoption of Accrual Basis IPSASs

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 APPENDICES
APPENDIX 1: INTANGIBLE ASSETS RECONCILIATION TABLE (INDICATIVE)
Military Software and Licences
Software Development Bespoke Trademarks Under Total
Licences Costs Software and Patents Other Construction
Cost of Assets
1 January 2020
Additions
Impairments / Revaluations*
Disposals
Transfers / Adjustments**
31 December 2020
Amortisation and Impairment
1 January 2020
Amortisation and Impairment
Impairments / Revaluations*
Disposals
Reversals
Transfers / Adjustments**
31 December 2021
Net Book Values
At 01 January 2020
At 31 December 2020
* The revaluation model is inactive

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 APPENDIX 2: FLOW CHART OF INTANGIBLE ASSETS

INTANGIBLE ASSETS

Is the asset identifiable? §2.1 No Expense

Yes

Does the asset meet the definition

of an intangible asset? §2.1 No Expense

Yes

Does the asset meet the

recognition criteria of an No Expense
intangible asset? §3.1

Yes
Internally
Recognize the asset at cost or generated goodwill
fair value §3.3 EXPENSE §3.3.5

Exchange of Acquired asset as

Separate Non-
assets part of an Internally
acquired exchange
MEASURED AT acquisition generated
assets transaction
FAIR VALUE OF MEASURED AT assets
MEASURED MEASURED
THE ASSET FAIR VALUE MEASURED
AT COST OF AT FAIR
RECEIVED OR (i.e. amount of AT
ACQUISTION VALUE
THE ASSET GIVEN the transaction) COST §3.3.6
§3.3.1 §3.3.3
UP §3.3.4 §3.3.2

Subsequent measurement:
Cost Model §4.1 or Fair Value Model §4.2

Yes Does the asset have a finite useful No

life?

Do not amortise over useful life

Amortise over useful life §4.3.1
§4.3.2

Impairment Review §5

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