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Business Combinations Phase 1

Date recorded:

Definition of intangible asset

The staff proposed to not change the definition of an intangible asset as defined in ED3. The Board agreed but this is subject to a discussion of inter-relation of certain legal rights and contingent assets (for example, ability to participate in a bidding process).

The Board agreed to provide additional guidance where prior exchange transactions outside of a business combination have taken place.

IAS 38: Question 2 - Criteria for recognising intangible assets acquired in a business combination separately from goodwill

The majority of commentators and field visits disagreed on this matter, as not sufficient information is always available. The staff proposed that where there are individual assets that can be identified, but they can only be measured together with one, and only one, other asset, these assets should be viewed as a package and should be recognised as one asset. The other asset could include tangible but not financial assets. The Board agreed with this proposal, and they also agreed to include a presumption that where there is a finite life the fair value can be reliably determined.

IAS 38: Question 3 - Indefinite useful life of an intangible asset

The Board agreed to retain the ED 3 approach but further clarity will be provided.

IAS 38: Question 4 - Useful life of an intangible asset from contractual or other legal rights

The Board agreed to retain the ED3 approach.

IAS 38: Question 5 - non-amortisation of intangible assets with indefinite useful lives

The Board agreed to not change ED 3.

IAS 36: Question 2 - Measuring the recoverable amounts of intangible assets with indefinite lives, and accounting for impairment losses and reversals of impairment losses

The Board agreed to not change ED 3.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.