Question

The HKICPA’s “Conceptual Framework for Financial Reporting” identifies, among others, the qualitative characteristics of relevance, comparability, verifiability. Give three examples of how HKAS 38 “Intangible Assets” apply each of these qualitative characteristics.

Answer 1

Hong Kong Standard 38 – Intangible asset – recognition of Intangible asset – when it sis probable that expected future economic benefit that are attributable to the asset will flow to the entity

The cost of the asset can be measured reliable .

An entity shall assess the probability of expected future economic benefits using reasonable and supportable assumptions that represents management best estimate of the set of economic that will exist over the useful life of the asset .

HKICPA intention while issuing HKAS 38 was to reflect only             was to reflect only theses changes resulting from the business combination project and not to reconsider all of the previous requirement in SSAP 29. The changes are primarily concerned with clarifying the notion of identifiability” as it relates to intangible asset , the useful life and amortization of intangible asset and the accounting for in process research and development projects acquired in business combination .

As per comparability point of view – SSAP 29 did not define indentifiability

Research and development expenditure – an entity shall disclose the aggregate amount of research abd development expenditure recognised as expenses during the period .

Intangible asset measured after recognition using revalution model- need to disclose revalue date , carrying amount of revamued intangible asset ,

An entity also disclose –

An intangible asset assessed an having an identified useful life the carrying amount of that asset, the reason supporting the assessment of an identified useful life

For intangible asset acquired by way of a governmental grant and initially recognised fair value

The amortization methods used for intangible assets with finite useful lives

The gross carrying amount and any accumulated amortization at the start and end of the period

A reconciliation of the carrying amount at the start and end of the period showing :

1. Addition , indicating separate those from internal development , acquired separately and those acquired through business combination
2. Impairment loss recognised in Income statement

Exchange difference adjustment