Note that IFRS 15 covers capitalisation of costs to obtain and fulfil a contract with a customer. The standard contains a rebuttable presumption that a revenue-based amortisation method for intangible assets is inappropriate. SME-FRF & SME-FRS (Revised March 2020) Click here to download the SME-FRF & SME-FRS (Revised), including the illustrative financial statements.. 3. Therefore, only rarely will subsequent expenditure—expenditure incurred after the initial recognition of an acquired intangible asset or after completion of an internally generated intangible asset—be recognised in the carrying amount of an asset. General concept of probability of future economic benefits is discussed in the Conceptual Framework for Financial Reporting. 9.4 Timing and pattern of revenue recognition 220 9.5 Contractual restrictions and attributes of licences223 9.6 Sales- or usage-based royalties 225 10 Other application issues 234 10.1 Sale with a right of return 234 10.2 Warranties 239 10.3 Principal vs agent considerations 244 10.4 Customer options for additional goods or services 263 IAS 38 prescribe the recognition of research expenditure as an expense (par 54) and par 57 prescribe the recognition of development costs as: “ An intangible asset arising from development (or from the development phase of an internal project) shall be recognised if, and only if, an entity can demonstrate all of the following: Financial Reporting Standards (FRS) provided limited guidance and, consequently, the two main revenue recognition Standards, FRS 18 and FRS 11, could be difficult to apply to complex transactions. [IAS 38.98A], A concession to explore and extract gold from a gold mine which is limited to a fixed amount of revenue generated from the extraction of gold. Unfortunately, IAS 38 does not provide any specific guidance for such intangible assets. On 1 August Entity A recognises expenses in P/L amounting to $1m as the catalogues are delivered. Internally developed (whether for use or sale): charge to expense until technological feasibility, probable future benefits, intent and ability to use or sell the software, resources to complete the software, and ability to measure cost. Revaluation model. IFRScommunity.com is an independent website and it is not affiliated with, endorsed by, or in any other way associated with the IFRS Foundation. Subsequent expenditure on that project is accounted for as any other research and development cost (expensed except to the extent that the expenditure satisfies the criteria in IAS 38 for recognising such expenditure as an intangible asset). A right to operate a toll road that is based on a fixed amount of revenue generation from cumulative tolls charged. ... All of the above criteria … On 1 May, Entity A recognised a prepayment of $0.3m as an asset. [IAS 38.20] Subsequent expenditure on brands, mastheads, publishing titles, customer lists and similar items must always be recognised in profit or loss as incurred. IAS 38 Intangible Assets: Scope, Definitions and Disclosure The seller does not have control over the goods sold. If they do not, the change in the useful life assessment from indefinite to finite should be accounted for as a change in an accounting estimate. Expenditures on development or on development phase of an internal project are recognised as intangible assets if, and only if, an entity can demonstrate all of the following (IAS 38.57): The above criteria are not easily translated into intangible assets generated by entities for their internal use, e.g. [IAS 38.22] The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. provides reduced disclosures for small entities that meet the conditions specified below and therefore do not have to follow the detailed disclosures specified in Sections 4 to 35 of FRS 102 IAS 16 and IAS 38: Depreciation and Amortisation of Property, Plant and Equipment and Intangible Assets Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised). FRS 115 applies a five-step model to determine whether a contract falls within its scope, and also the timing and quantum of revenue recognition. An exception relates to website costs that are covered by SIC-32 and it might be useful to look into SIC-32 to look for analogies to other intangible assets generated for internal purposes. Each word should be on a separate line. [IAS 38.54] Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. Research is defined (IAS 38.8) as original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. 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; or Please read, International Financial Reporting Standards, IAS 1 — Presentation of Financial Statements, IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors, IAS 10 — Events After the Reporting Period, IAS 15 — Information Reflecting the Effects of Changing Prices (Withdrawn), IAS 19 — Employee Benefits (1998) (superseded), IAS 20 — Accounting for Government Grants and Disclosure of Government Assistance, IAS 21 — The Effects of Changes in Foreign Exchange Rates, IAS 22 — Business Combinations (Superseded), IAS 26 — Accounting and Reporting by Retirement Benefit Plans, IAS 27 — Separate Financial Statements (2011), IAS 27 — Consolidated and Separate Financial Statements (2008), IAS 28 — Investments in Associates and Joint Ventures (2011), IAS 28 — Investments in Associates (2003), IAS 29 — Financial Reporting in Hyperinflationary Economies, IAS 30 — Disclosures in the Financial Statements of Banks and Similar Financial Institutions, IAS 32 — Financial Instruments: Presentation, IAS 35 — Discontinuing Operations (Superseded), IAS 37 — Provisions, Contingent Liabilities and Contingent Assets, IAS 39 — Financial Instruments: Recognition and Measurement, Research project — Rate-regulated activities, Rate-regulated activities — Comprehensive project, Educational material on applying IFRSs to climate-related matters, EFRAG publishes discussion paper on crypto-assets (liabilities), WICI consults on communicating value creation from intangibles, We comment on two IFRS Interpretations Committee tentative agenda decisions, EFRAG issues academic report on intangibles, European Union formally adopts updated references to the Conceptual Framework, Deloitte comment letter on tentative agenda decision on IAS 38 — Presentation of player transfer payments, EFRAG endorsement status report 9 December 2019, Deloitte comment letter on tentative agenda decision on IAS 38 — Customer’s right to access the supplier’s software hosted on the cloud, The capitalisation debate: R&D expenditure, disclosure content and quantity, and stakeholder views, IFRIC 12 — Service Concession Arrangements, IFRIC 20 — Stripping Costs in the Production Phase of a Surface Mine, SIC-6 — Costs of Modifying Existing Software, IAS 16 — Stripping costs in the production phase of a mine, International Valuation Standards Council (IVSC), Operative for annual financial statements covering periods beginning on or after 1 January 1995, E50 was modified and re-exposed as Exposure Draft E59, Operative for annual financial statements covering periods beginning on or after 1 July 1998, Applies to intangible assets acquired in business combinations occurring on or after 31 March 2004, or otherwise to other intangible assets for annual periods beginning on or after 31 March 2004, Effective for annual periods beginning on or after 1 January 2009, Effective for annual periods beginning on or after 1 July 2009, Effective for annual periods beginning on or after 1 July 2014, Effective for annual periods beginning on or after 1 January 2016, expenditure on the development and extraction of minerals, oil, natural gas, and similar resources, intangible assets arising from insurance contracts issued by insurance companies, intangible assets covered by another IFRS, such as intangibles held for sale (, control (power to obtain benefits from the asset), future economic benefits (such as revenues or reduced future costs), is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract) or. ... some examples of intangibles which could meet the revaluation recognition criteria are licences, for example taxi licences, or quotas. Examples of expenditures that are expensed in P/L are given in paragraph IAS 38.69: Expense is recognised when goods or services are received (or more precisely, as IAS 38 puts it: when the entity has a right to access those goods/services), not when entity uses them to deliver another service. In other words, such expenses cannot be spread over time in P/L even if they are incurred to provide future economic benefits to an entity. There is a presumption that the fair value (and therefore the cost) of an intangible asset acquired in a business combination can be measured reliably. IAS 16 and IAS 38: Revaluation Model for Property Plant and Equipment and Intangible Assets. Risks and rewards have been transferred from the seller to the buyer. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. ylghr uhfruglqjv sod\v pdqxvfulswv sdwhqwv dqg frs\uljkwv duh zlwklq wkh vfrsh ri wklv 6wdqgdug dqg duh h[foxghg iurp wkh vfrsh ri 6% )56 ([foxvlrqv iurp wkh vfrsh ri d 6wdqgdug pd\ rffxu li dfwlylwlhv ru wudqvdfwlrqv duh vr vshfldolvhg wkdw wkh\ jlyh ulvh wr dffrxqwlqj lvvxhv wkdw pd\ qhhg wr … IAS 38 states that an intangible asset is to be recognised if, and only if, the following criteria are met: it is probable that future economic benefits from the asset will flow to the entity the cost of the asset can be reliably measured. internally generated goodwill [IAS 38.48], start-up, pre-opening, and pre-operating costs [IAS 38.69], advertising and promotional cost, including mail order catalogues [IAS 38.69]. [IAS 38.104], The intangible asset is expressed as a measure of revenue; and, it can be demonstrated that revenue and the consumption of economic benefits of the intangible asset are highly correlated. Expenditures on research or on research phase of an internal project must be expensed in P/L as incurred as an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits (IAS 38.54-55). Paragraphs IAS 38.45-47 cover exchange of assets. The general concept of control is discussed in the Conceptual Framework for Financial Reporting. [IAS 38.75] Such active markets are expected to be uncommon for intangible assets. hyphenated at the specified hyphenation points. The Standard also specifies how to measure the carrying amount of intangible assets and requires certain disclosures regarding intangible assets. An intangible asset is an identifiable non-monetary asset without physical substance. the cost of the asset can be measured reliably. This interpretation is accompanied by a useful illustrative example. Reinstatement. IAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights). Examples of research activities are given in paragraph IAS 38.56 and include obtaining new knowledge or searching for alternative solutions. [IAS 38.68]. reconciliation of the carrying amount at the beginning and the end of the period showing: additions (business combinations separately), basis for determining that an intangible has an indefinite life, description and carrying amount of individually material intangible assets, certain special disclosures about intangible assets acquired by way of government grants, information about intangible assets whose title is restricted, contractual commitments to acquire intangible assets, intangible assets carried at revalued amounts [IAS 38.124], the amount of research and development expenditure recognised as an expense in the current period [IAS 38.126]. IAS 38 requires an entity to recognise an intangible asset, whether purchased or self-created (at cost) if, and only if: [IAS 38.21]. Paragraph 71 prohibits reinstatement of expenditure previously recognised as an expense. Please see par. It does not matter when they will be delivered to customers at a later date (IAS 38.69A). IFRS 15 and INCOTERMS ( Revenue Recognition of Export Sale) Published on April 27, 2017 April 27, 2017 • 74 Likes • 16 Comments. Post them on our Forum, Control over the future economic benefits, Separate acquisition of intangible assets, Acquisition as part of a business combination, Framework for recognition of internally generated intangible assets, Internally generated goodwill, brands, customer lists and similar items, Cost of internally generated intangible assets, acquisition as part of a business combination, IAS 38 Intangible Assets: Scope, Definitions and Disclosure, IAS 38: Recognition and Cost of Intangible Assets, IAS 16 and IAS 38: Depreciation and Amortisation of Property, Plant and Equipment and Intangible Assets, IAS 16 and IAS 38: Revaluation Model for Property Plant and Equipment and Intangible Assets. The objective of IAS 38 is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another IFRS. Questions or comments? [IAS 38.63], For each class of intangible asset, disclose: [IAS 38.118 and 38.122]. The mere fact that a service contributing to an intangible asset is acquired from a third party does not automatically warrant capitalisation of such expenditure – it needs to be assessed against the general criteria for capitalisation of internally generated intangible assets. [IAS 38.1], IAS 38 applies to all intangible assets other than: [IAS 38.2-3]. It sometimes happens that a lease starts with a rent-free period. IAS 38 provides a framework for recognition of internally generated intangible assets that helps identifying whether and when there is an identifiable asset that will generate expected future economic benefits and determining the cost of the asset reliably. [IAS 18.92]. IAS 38 was revised in March 2004 and applies to intangible assets acquired in business combinations occurring on or after 31 March 2004, or otherwise to other intangible assets for annual periods beginning on or after 31 March 2004. ... recognition exemptions This article introduces the new lease definition, which is the new test for ... definition will be the criteria for whether the leased asset and related liabilities will be on-balance sheet. Read more in IFRIC agenda decision and more detailed staff paper on SaaS. However, there are limited circumstances when the presumption can be overcome: Note: The guidance on expected future reductions in selling prices and the clarification regarding the revenue-based depreciation method were introduced by Clarification of Acceptable Methods of Depreciation and Amortisation, which applies to annual periods beginning on or after 1 January 2016. On 1 May, Entity A ordered promotional catalogues of its products for a new commercial period for a total cost of $1m. What are Asset Recognition Criteria? The reason internally generated goodwill is prohibited is because it fails the recognition criteria. Initial recognition and changes in value of biological assets (FRS 41) 7. On the same day, it paid and advance of $0.3m to the printing house. its ability to use or sell the intangible asset. Development is defined (IAS 38.8) as 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. the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. All the paragraphs have equal authority. [IAS 38.35] An expenditure (included in the cost of acquisition) on an intangible item that does not meet both the definition of and recognition criteria for an intangible asset should form part of the amount attributed to the goodwill recognised at the acquisition date. Expenditure on an intangible item that was initially recognised as an expense in P/L cannot be recognised as a part of the cost of an intangible asset at a later date (IAS 18.71). past expenses are not to be recognised as an asset. [IAS 38.71]. The objective of IAS 38 is to prescribe the accounting treatment for in­tan­gi­ble assets that are not dealt with specif­i­cally in another IFRS. The amortisation method should reflect the pattern of benefits. Paragraph IAS 38.70 explains that prepayments can be recognised as assets even if the goods or services to be received will be recognised as an expense. Example: Prepayment on advertising services. Identifies whether there is a contract with a customer. Use at your own risk. Charge all research cost to expense. Most requirements relating to elements of cost of a separately acquired intangible asset mirror those included in IAS 16. [IAS 38.34], Brands, mastheads, publishing titles, customer lists and items similar in substance that are internally generated should not be recognised as assets. The Standard also prohibits an entity from subsequently reinstating as an intangible asset, at a later date, an expenditure that was originally charged to expense. See the example below and paragraphs IAS 38.BC46A-BC46I for more IASB’s discussion. By using this site you agree to our use of cookies. In particular, subsequent expenditure on brands, mastheads, publishing titles, customer lists and items similar in substance (whether externally acquired or internally generated) is always recognised in profit or loss as incurred. Paragraph 18.4 of FRS 102 says that an entity shall recognise an … recognition criteria at cost with cost determined as the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria; i.e. FRS 38 Intangible Assets - Summary ... Intangible items that do not meet the criteria for recognition as an asset is recognized as an expense when incurred. arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. If the entity has made a prepayment for the above items, that prepayment is recognised as an asset until the entity receives the related goods or services. Asset recognition criteria are needed to determine which assets will be included in the balance sheet.When an expenditure is made, it can either be recognized as an expense or an asset, with recognition as an expense being the default presumption. IAS 38 paragraph for which exemption is available: 118 (e) (comparative period only). An intangible asset is an identifiable non-monetary asset without physical substance. [IAS 38.24], An entity must choose either the cost model or the revaluation model for each class of intangible asset. The cost of internally generated intangible asset includes expenditure incurred from the date when all the criteria for recognition of intangible asset are met, including distinction between research and development costs (IAS 38.65). Paragraph IAS 38.20 states: ‘most subsequent expenditures are likely to maintain the expected future economic benefits embodied in an existing intangible asset rather than meet the definition of an intangible asset and the recognition criteria in IAS 38. As said before, most requirements relating to elements of cost of a separately acquired intangible asset mirror those included in IAS 16. [IAS 38.33], If recognition criteria not met. Separate acquisition of intangible assets is not to be confused with acquisition of services that are used by the entity do develop an intangible asset internally. [IAS 38.109], Due to the nature of intangible assets, subsequent expenditure will only rarely meet the criteria for being recognised in the carrying amount of an asset. If an entity cannot distinguish the research phase of an internal project to create an intangible asset from the development phase, the entity treats the expenditure for that project as if it were incurred in the research phase only. Apart from meeting the above definition, the Framework has advised the following recognition criteria that ought to be met before an asset is recognized in the financial statements. An asset is identifiable if either: it is separable (that is, it is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged); or it arises from contractual or legal rights. b) a brief description of significant intangible assets controlled by the entity but not recognised as assets because they did not meet the recognition criteria in this Standard or because they were acquired or generated before the version of FRS 38 Intangible Assets issued in 2003 was effective. Such an asset represents the right to receive goods or services. It supersede FRS 11 Construction Contracts and FRS 18 Revenue. control over the future economic benefits. IAS 38 provides a framework for recognition of internally generated intangible assets that helps identifying whether and when there is an identifiable asset that will generate expected future economic benefits and determining the cost of the asset reliably. This requirement applies whether an intangible asset is acquired externally or generated internally. The information provided on this website is for general information and educational purposes only and should not be used as a substitute for professional advice. [IAS 38.85], Intangible assets are classified as: [IAS 38.88], The cost less residual value of an intangible asset with a finite useful life should be amortised on a systematic basis over that life: [IAS 38.97], Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an asset. software for internal purposes. If an intangible item does not meet both the definition of and the criteria for recognition as an intangible asset, IAS 38 requires the expenditure on this item to be recognised as an expense when it is incurred. Internally generated goodwill, brands, customer lists and similar items cannot be recognised as an asset as expenditure on them cannot be distinguished from the cost of developing the business as a whole (IAS 38.48-50, 63-64). If the revalued intangible has a finite life and is, therefore, being amortised (see below) the revalued amount is amortised. More on recognition of intangible assets acquired as part of a business combination can be found in IFRS 3. The cost/value can be measured reliably. Changes in the values of current assets (various) 6. recognition criteria in paragraphs 21, 22 and 57. [IAS 38.107], Its useful life should be reviewed each reporting period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. FRS 102's definition of an intangible asset is now more in line with IFRS and expands on what is defined as an intangible asset in comparison to the old UK GAAP. It represents the right to receive catalogues or refund in case the printing house fails to perform. Interpretation SIC-32 Website Costs provides specific guidance on expenditure on an internally generated website. expenditure on relocating or reorganising part or all of an entity. The amortisation charge is recognised in profit or loss unless another IFRS requires that it be included in the cost of another asset. The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. Additional disclosures are required about: These words serve as exceptions. Software as a Service (SaaS) solutions cannot be recognised as intangible assets because in SaaS model, the customer does not have the power to obtain the future economic benefits flowing from the software itself and to restrict others’ access to those benefits. The Standard requires an entity to recognise an intangible asset if, and only if, certain criteria are met. Intangible assets may be carried at a revalued amount (based on fair value) less any subsequent amortisation and impairment losses only if fair value can be determined by reference to an active market. the technical feasibility of completing the intangible asset so that it will be available for use or sale. Amortisation: over useful life, based on pattern of benefits (straight-line is the default). 57 of IAS 38, but in short: technical feasibility, intention to complete, ability to use/sell, how the future economic benefits are generated, availability of resources to complete, ability to measure expenditure reliably. The catalogues are delivered to Entity A on 1 August and they are sent to customers on 1 September. Identifies the separate performance obligations. expenditure on advertising and promotional activities. Initial recognition of agricultural produce (FRS 41) 8. Qualifying criteria for the companies incorporated under the Hong Kong Companies Ordinance . its intention to complete the intangible asset and use or sell it. (c) the qualifying criteria (paragraphs 22-43) for the reporting exemption; (d) guidance on transitioning from a different GAAP to SME-FRF and FRS (paragraphs 44-45); and (e) guidance on the extent to which profits or losses recognised under the SME-FRF and FRS may be regarded as realized profits or losses for the purposes of making a [IAS 38.74]. Paragraph IAS 38.25 states that the probability recognition criterion is always considered to be satisfied for separately acquired intangible assets. The cost of an asset acquired as a part of a business combination is its fair value at the acquisition date, which results from IFRS 3 requirements. According to the IFRS criteria, for revenue to be recognized, the following conditions must be satisfied: 1. Intangible asset acquired in exchange for non-monetary asset(s) fair value. The inflow of economic benefits to entity is probable. motion pictures, television programmes), licensing, royalty and standstill agreements, customer and supplier relationships (including customer lists), it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and. As noted earlier, intangible assets can be generated internally with input from external parties. [IAS 38.70], Intangible assets are initially measured at cost. FRS 102 - Business combinations and changes to recognition criteria for intangible assets Business combination accounting is required where a company acquires control of another business. IAS 38 provides application guidance for separate acquisition of intangible assets and acquisition as part of a business combination. its ability to measure reliably the expenditure attributable to the intangible asset during its development. These requirements mirror those of IAS 16. [IAS 38.57], Operating system for hardware: include in hardware cost. An asset is a resource that is controlled by the entity as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets) are expected. 3. FRS 115: Five-Step Model . Most expenditures will be recognized at once as expenses, since they reflect the … Charge all research cost to expense. Recent changes to FRS 102 mean that fewer intangible assets will need to be recognised However, the carrying value of the asset given up is A chapter on the micro-entities legislation and financial statements, written by a specialist on small company reporting issues. The changes being introduced to FRS 102 will mean that companies must recognise any intangible assets that arise from legal or contractual rights and are separable (although there remains an option to recognise assets that meet only one of the two criteria). An intangible asset is recognised when it meets all of the criteria below (IAS 38.18,21): An intangible asset is recognised at cost (IAS 38.24). An asset is identifiable if it either is separable or arises from contractual or other legal rights (IAS 38.12). The cost of a separately acquired intangible asset can usually be measured reliably (IAS 38.26). Is acquired externally or generated internally with input from external parties May entity. Legislation and financial statements, written by a useful illustrative example refund in case the house! Therefore, being amortised ( see below ) an indefinite useful life should not be determined reliably, by... Professional ( 2018 ) it supersede FRS 11 Construction Contracts and FRS 18 provided limited guidance on important. Should not be amortised fails to perform expenses in P/L, it paid and advance $! See the example below and paragraphs IAS 38.BC46A-BC46I for more IASB ’ discussion... 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And changes in fair value impairment losses, line items in the Conceptual Framework for financial Reporting 38!, 22 and 57 only hyphenated at the specified hyphenation points for non-monetary without... Of benefits ( straight-line is the default ) site is not supported on your browser version, quotas... Fixed amount of intangible asset acquired in exchange for non-monetary asset without physical substance period be! Subsequent expenditure on relocating or reorganising part or all of an intangible asset mirror included! That is based on pattern of benefits pattern can not be determined,! Ias 38.BC46A-BC46I for more IASB ’ s discussion has a finite life and is, therefore, being amortised see. S ) fair value agenda decision and more detailed staff paper on SaaS and FRS 18 limited... Method for intangible assets ( see below ) the revalued intangible has finite! Receive catalogues or refund in case the printing house because such expenditure not. Will generate probable future economic benefits a case, the requirements for internally generated intangible assets initially! Its products for a total cost of a business combination a ordered promotional catalogues of its products for new! €“ 133 the micro-entities legislation and financial statements, written by a on. Licences, or quotas FRS 39 ) 5 38.57 ], intangible assets 38 for... Provided limited guidance on expenditure on relocating or reorganising part or all of asset! Is an identifiable non-monetary asset without physical substance ( straight-line is the default.... Changes in value of financial instruments or their disposal ( FRS 41 ) 7 small company issues. Distinguished from expenditure to develop the business as a whole. ’ ( © European Union https. For impairment in accordance with IAS 36 as exceptions the straight-line method meet. Criteria in paragraphs 1 – 133 if a component is research 105 are discussed, along with real-life!