Purchased intangible assets

In this lesson

1. 0:00 Purchased intangibles: recognition and cost
2. 1:00 Subsequent measurement: cost and revaluation models
3. 1:37 Worked example: calculating initial asset cost
4. 3:35 Amortisation: principles and useful life
5. 5:31 Amortisation illustration: time apportionment
6. 7:11 Revaluation model: when and how it applies
7. 10:54 Worked example: patent revaluation restrictions
8. 13:09 Internally generated intangibles: non-recognition

About this lesson

You'll discover how to calculate the initial cost of intangibles (including directly attributable expenses), understand amortisation and how it differs from depreciation, and explore when the revaluation model might apply. Through worked examples, you'll see how to handle time-apportioned amortisation, recognise that certain intangibles like patents cannot be revalued, and distinguish between purchased and internally generated intangibles. The lesson covers the initial measurement of purchased intangibles at cost, including the purchase price (after trade discounts), non-refundable taxes, and directly attributable expenses like legal fees. You'll learn that subsequent measurement typically uses the cost model – cost minus amortisation – with amortisation charged to the statement of profit and loss over the asset's useful life. The straight-line method is standard unless told otherwise, and amortisation begins once the asset is ready for use. You'll also explore the revaluation model in theory, understanding that while intangibles can theoretically be revalued through other comprehensive income, IAS 38 specifically prohibits revaluation of trademarks, brand names, patents, and publishing rights because they lack active markets. The lesson emphasises practical application through examples showing time apportionment of amortisation charges and clarifies why internally generated intangibles – such as self-created goodwill or brands – cannot be capitalised because their costs cannot be reliably measured separately from operating costs.

Duration: 14m