Ind AS 38, Intangible Assets, provides guidance on the recognition, measurement, and disclosure of intangible assets. Intangible assets are identifiable non-monetary assets without physical substance that are controlled by an entity and have the potential to generate future economic benefits.
Under Ind AS 38, an intangible asset is recognized if it meets certain criteria, including being separable, having probable future economic benefits, and its cost can be reliably measured. Intangible assets are initially measured at cost, which includes directly attributable costs and any directly attributable borrowing costs. Subsequently, an entity can choose to measure intangible assets at either cost less accumulated amortization or at revalued amount.
Intangible assets with finite useful lives are amortized over their estimated useful lives, while those with indefinite useful lives are not amortized but are subject to impairment testing. Impairment testing is required when there is an indication that the carrying amount of an intangible asset may exceed its recoverable amount.
Ind AS 38 also provides guidance on research and development costs. Research costs are expensed as incurred, while development costs can be capitalized if certain criteria are met.
Disclosure requirements include information about the nature, useful lives, and carrying amounts of intangible assets, as well as any commitments for the acquisition or disposal of such assets.
