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The company that I worked has a 5 years business strategic plan and planning to be part of stock exchange in 5 years. So they have invested quite big amount to business plan support. I just would like to know that can we capitalise this cost as intangible asset? And how we can define this cost under IFRS? Thanks
in General IFRS Discussion by

1 Answer

0 votes
I think the basic requirements for the recognition of an intangible asset, i.e. identifiability, control over a resource and existence of future economic benefits can be satisfied in your case as per IAS 38 Intangible Assets.

However this being an internally generated intangible asset, IAS 38 further requires to check whether the expense meets the criteria for recognition, an entity classifies the generation of the asset into:

(a) a research phase; and
(b) a development phase.

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.

Examples of research activities are:
(a) activities aimed at obtaining new knowledge;
(b) the search for, evaluation and final selection of, applications of research findings or other knowledge;
(c) the search for alternatives for materials, devices, products, processes, systems or services; and
(d) the formulation, design, evaluation and final selection of possible alternatives for new or improved materials, devices, products, processes, systems or services.

Therefore, I think the provisions in the Standard do allow you to recognize the cost of the business plan as an intangible asset.
by Level 5 Member (25.6k points)
I suspect that the auditors would question whether there are future economic benefits such as being listed.  Most well run companies have business plans with various objectives.  I cannot rremember these being capitalised