IFRS 3 What are the different classifications of software?

Computer software can be classified as either a tangible asset, i.e. property, plant and equipment or an intangible asset, depending on the level of integration with the related hardware.

In cases where software is an integral part of the related hardware, i.e. the hardware cannot operate without the software, the software will be treated as property, plant and equipment together with the related hardware already recognised, which will normally be computer equipment, a laboratory computer equipment (e.g. computer hardware and related operating systems are recognised under PPE). In such a case, the Accounting Policy on Property, Plant and Equipment shall apply.

In cases where the software is not an integral part of the related hardware, i.e. the hardware can … Read more

How is goodwill different from other intangible assets?

An asset, which has no physical existence such as corporate intellectual properties (patents, trademarks, business methodologies and copyrights), trademarks, patents, software, goodwill and brand recognition are known to be an “Intangible asset”.

Types of Intangible assets and their recognition How is goodwill different from other intangible assets?

Intangible assets of the business are either acquired through a business combination or are developed internally. In most of the cases if the asset is acquired through an acquisition or a merger than it is recorded at its fair value while if the assets are generated internally than it is accounted for according to the amount of the costs incurred during the development phase of the asset.

Under IFRS the … Read more

Customer relationships valuation

References:

Customer contracts and the related customer relationships
Non-contractual customer relationships
Order or production backlog

Introduction

Here a valuation model is presented to value customer contracts and the related customer relationship and the non-contractual customer relationships, as per IFRS 3 Business Combinations.

What are the inputs?

Revenue – represents revenue from existing customer relationships for existing products. Includes contractual and non-contractual relationships (even those without current backlog or commitments). Separate valuation of a backlog revenue intangible asset can be considered if and when such backlog exists.… Read more

IAS 38 Non-contractual customer relationships

In a Business Combinations, this is a intangible asset and is therefore recognised separately from goodwill, provided that its fair value can be measured reliably. This customer-related intangible asset does not arise from contractual or other legal rights, but meets the definition of an intangible asset because it is separable.

If a customer relationship acquired in a business combination does not arise from a contract, the relationship is an intangible asset if it meets the separability criterion. Exchange transactions for the same asset or a similar asset provide evidence of separability of a non-contractual customer relationship and might also provide information about exchange prices that should be considered when estimating fair value.

There are valuation models to … Read more

Impairment testing cash generating unit with leases

A right-of-use asset will frequently be included in a cash generating unit to be tested for impairment. At initial recognition, the right-of-use-asset equals the recognised lease liability, plus any lease payments made at or before the commencement date, less any lease incentives received, plus any initial direct costs incurred by the lessee and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset and restoring the site on which the leased asset is located. The most significant part of the right-of-use asset will often be the lease liability, which is the present value of the lease payments discounted at the interest rate implicit in the lease if this rate is … Read more

Argentina’s sovereign debt overhaul intentions

July – August 2019 – Argentina’s assets tumbled in the wake of President Mauricio Macri suffering an unexpected bruising primary election loss this month at the hands of populist-leaning Peronist Alberto Fernandez, with the central bank forced to burn through its reserves to prop up an ailing peso.

Unable to roll over much of its short-term local debt, Treasury Minister Hernan Lacunza on Wednesday announced plans to extend maturities of local law bonds held by institutional investors and stated intentions to do so on international debt and dues owed to the International Monetary Fund.

Some $7 billion of short-term debt, $50 billion long-term debt and $44 billion of IMF debt are earmarked for an overhaul, according to calculations … Read more