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IFRS treatment on intangible assets (patents)
02-26-2012, 06:46 AM
Post: #1
IFRS treatment on intangible assets (patents)
My company is spending consulting fees on trademarks and patents, and I wonder how the new IFRS rules apply on these fees?
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02-26-2012, 07:11 AM
Post: #2
RE: IFRS treatment on intangible assets (patents)
I have been doing some reading on this, and my understanding is that by the rules of IAS 38, an intangible asset, should be:

be identifiable
be controlled by the company
increase future profits

An intangible asset should be separately identifiable (the company can sell it, licence it, etc).

Intangible assets can arise from a purchase (for example, through the purchase of a patent) or be generated within the organisation (for example, through expenditure on R & D). Something that can be purchased can obviously be identified. If a profit making enterprise purchases something it should be in the expectation that it will generate cash flows.

If an intangible is created within a company rather than purchased, the requirements are slightly more complicated. There are few intangibles than justify their cost being capitalised and shown on the balance sheet. Although companies talk of "investing" in brands, advertising and marketing expenditure go straight to the P & L for good reasons. The role such expenditure plays in generating cash flows is too indirect and uncertain to justify treating what it creates as an asset.

Therefore the costs can be fully written off as fees, and tax deductible. Would welcome any comments. Anyway, I will be phoning the CRA for a more specific answer.
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02-27-2012, 05:55 AM
Post: #3
RE: IFRS treatment on intangible assets (patents)
I think it makes a lot of sense to write off intangible costs created such as incorporation costs, trademark applications, or brand development as the costs are indeed spent. It will still take time to build value and how much value can be created is an unknown.
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03-15-2012, 02:19 PM
Post: #4
RE: IFRS treatment on intangible assets (patents)
Cash and other tangible assets aren't the only things we can leave to our descendants. There are kinds of non-economic inheritance that are perhaps even more essential, notes Bankrate. Preserving memories through a family legacy project is an important form of cultural inheritance that gives life rich shades of added meaning. You may read more: Understanding the true value of a family legacy
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03-30-2012, 04:03 PM
Post: #5
RE: IFRS treatment on intangible assets (patents)
Assets that have a physical form. Tangible assets include both fixed assets, such as machinery, buildings and land, and current assets, such as inventory. The opposite of a tangible asset is an intangible asset. Nonphysical assets, such as patents, trademarks, copyrights, goodwill and brand recognition, are all examples of intangible assets.

Keep in mind that you may already have a head-start on building your own documented family legacy. Photographs are an obvious example, but even things such as recipes, sheet music for songs, family heirlooms and more all serve the purpose of building a family history for future generations of the family to cherish. Money provides some physical security, but it can never truly provide the security of mind that only priceless memories can preserve.
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06-24-2014, 05:17 AM
Post: #6
RE: IFRS treatment on intangible assets (patents)
What I read I really liked it. Thank you for your information!

dubli
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07-04-2014, 12:27 AM
Post: #7
RE: IFRS treatment on intangible assets (patents)
Keep in mind that per the CRA the incorporation costs must be capitalized and CCA must be claimed at a rate of 7% of 75% of the cost.

Allan Madan
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09-09-2014, 12:14 AM
Post: #8
RE: IFRS treatment on intangible assets (patents)
(07-04-2014 12:27 AM)Allan.Madan Wrote:  Keep in mind that per the CRA the incorporation costs must be capitalized and CCA must be claimed at a rate of 7% of 75% of the cost.

Allan Madan

Do you have a link from the CRA's website to verify this? I just checked the full Capital Cost Allowances regulations (http://laws-lois.justice.gc.ca/eng/regul...e-221.html) and don't see incorporation costs anywhere.
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09-12-2014, 09:47 AM
Post: #9
RE: IFRS treatment on intangible assets (patents)
(09-09-2014 12:14 AM)wtmt_ptr Wrote:  
(07-04-2014 12:27 AM)Allan.Madan Wrote:  Keep in mind that per the CRA the incorporation costs must be capitalized and CCA must be claimed at a rate of 7% of 75% of the cost.

Allan Madan

Do you have a link from the CRA's website to verify this? I just checked the full Capital Cost Allowances regulations (http://laws-lois.justice.gc.ca/eng/regul...e-221.html) and don't see incorporation costs anywhere.

Take a look at IT143R3 paragraphs 13 & 14.
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09-25-2014, 12:35 AM
Post: #10
RE: IFRS treatment on intangible assets (patents)
Very useful information on "Transactions Involving Eligible Capital Property" (IT123R6) can be found at http://www.cra-arc.gc.ca/E/pub/tp/it123r6/README.html .

Regards,
Madan CA
http://www.madanca.com
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