To be recognized as intangible fixed asset, an intangible asset must simultaneously satisfy
To be recognized as intangible fixed asset, an intangible asset must simultaneously satisfy:
– The definition of an intangible fixed asset; and
– Four (4) recognition criteria below:
+ The certainty to acquire future economic benefits brought about by the asset;
+ The asset’s historical cost must be determined in a reliable way;
+ The useful life is estimated to last for over one year;
+ All value criteria prescribed by current regulations are met.
17. The enterprises must determine the degree of certainty to acquire future economic benefits through using reasonable and grounded assumptions on the economic conditions which will exist throughout the useful life of the assets.
18. Intangible fixed assets must have their initial value determined according to their historical cost.
DETERMINATION OF HISTORICAL COST OF INTANGIBLE FIXED ASSETS IN EACH CASE
Purchase of separate intangible fixed assets
19. The historical cost of a separately-purchased intangible fixed asset consists of the buying price (minus (-) trade discounts or price reductions), taxes (excluding reimbursed tax amounts) and expenses directly related to the putting of the asset into use as planned.
20. Where the land use right is purchased together with houses and architectural objects affixed on the land, its value must be separately determined and recognized as intangible fixed asset.
21. Where a procured intangible asset is paid by deferred payment mode, its historical cost shall be shown at the purchasing price which should have been promptly paid at the time of purchase. The difference between the total amount payable and the promptly-paid purchase price shall be accounted into the production and business expense according to the payment period, except where such difference is included in the historical cost of the intangible asset (capitalization) under the regulations of the accounting standard “Costs of borrowing.”
22. If an intangible fixed asset is formed from the exchange involving payment accompanied with vouchers related to the capital ownership of the establishment, its historical cost is the reasonable value of vouchers issued in relation to capital ownership.
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