The application of IAS 29 results in an adjustment for the loss of purchasing power of the Belarusian ruble recorded
in the income statement. In a period of inflation, an entity holding an excess of monetary assets over monetary
liabilities loses purchasing power, which results in a loss on the net monetary position. This loss/gain is derived as
the difference resulting from the restatement of non-monetary assets and liabilities, equity and items in the statement
of comprehensive income. Corresponding figures for the year ended 31 December 2013 have also been restated so
that they are presented in terms of the purchasing power of the Belarusian Ruble as at 31 December 2014.
Telefónica, S.A. is an example of a parent entity that has subsidiaries that operate in an
economy subject to hyperinflation. As a parent entity, Telefónica, S.A. would not
restate the comparative amounts and, therefore, has reported a reconciling item for the
effect of hyperinflation adjustments.
Extract 16.3: Telefónica, S.A. and subsidiaries (2017)
Notes to the consolidated financial statements (consolidated annual accounts) for the year ended December 31,
2017 [extract]
Note 17
Income tax matters [extract]
Deferred taxes movement
The movements in deferred taxes in the Telefónica Group in 2017 and 2016 are as follows:
Deferred tax
Millions of euros
Deferred tax assets
liabilities
Balance at December 31, 2016
8,229 2,395
Additions
1,702
579
Disposals
(1,711)
(413)
Transfers
(196)
(391)
Translation differences and hyperinflation adjustments
(211)
(70)
Company movements and others
7
45
Balance at December 31, 2017
7,820 2,145
Hyperinflation
1207
References
1 Minutes of the meetings of the International 2
IFRIC Update, July 2014, p.11.
Practices Task Force are available at
www.thecaq.org
1208 Chapter 16
1209
Chapter 17
Intangible assets
1 INTRODUCTION ........................................................................................... 1213
1.1
Background .......................................................................................................... 1213
1.2 Terms
used
in IAS 38 ......................................................................................... 1214
2 OBJECTIVE AND SCOPE OF IAS 38 ............................................................. 1216
2.1
What is an intangible asset? ............................................................................... 1217
2.1.1
Identifiability ........................................................................................ 1217
2.1.2 Control
..................................................................................................
1218
2.1.3 Future
economic
benefits
.................................................................1220
2.2
Is IAS 38 the appropriate IFRS? .......................................................................1220
2.2.1
Whether to record a tangible or intangible asset .........................1220
2.2.2
Classification of programme and other broadcast rights as
inventory or intangible assets .......................................................... 1221
3 RECOGNITION AND MEASUREMENT .......................................................... 1223
3.1
Recognition .......................................................................................................... 1223
3.1.1
When to recognise programme and other broadcast rights ...... 1224
3.2
Measurement ....................................................................................................... 1226
3.3 Subsequent
expenditure
.................................................................................... 1227
4 SEPARATE ACQUISITION ............................................................................. 1227
4.1
Recognition .......................................................................................................... 1227
4.2 Components
of
cost
...........................................................................................
1228
4.3
Costs to be expensed ......................................................................................... 1228
4.4
Income from incidental operations while an asset is being
developed ............................................................................................................. 1229
4.5
Measurement of intangible assets acquired for contingent
consideration ....................................................................................................... 1230
4.6
Acquisition by way of government grant ....................................................... 1231
4.7 Exchanges
of
assets ............................................................................................ 1231
1210 Chapter 17
4.7.1
Measurement of assets exchanged.................................................. 1232
4.7.2 Commercial
substance ...................................................................... 1232
5 ACQUISITION AS PART OF A BUSINESS COMBINATION ............................ 1233
5.1
Recognition of intangible assets acquired in a business
combination ......................................................................................................... 1234
5.1.1
Probable inflow of benefits .............................................................. 1234
5.1.2
Reliability of measurement ............................................................... 1234
5.1.3
Identifiability in relation to an intangible asset acquired in
a business combination ..................................................................... 1234
5.1.3.A
Contractual-legal rights ................................................ 1235
5.1.3.B Separability
.....................................................................
1236
5.2
Examples of intangible assets acquired in a business combination ............ 1236
5.3
Measuring the fair value of intangible assets acquired in a business
combination ......................................................................................................... 1237
5.4
Customer relationship intangible assets acquired in a business
combination ......................................................................................................... 1237
5.5 In-process
research
and development ........................................................... 1239
6 INTERNALLY G
ENERATED INTANGIBLE ASSETS ...................................... 1240
6.1
Internally generated goodwill ......................................................................... 1240
6.2 Internally
generated
intangible assets ........................................................... 1240
6.2.1
Research phase ................................................................................... 1241
6.2.2 Development phase ........................................................................... 1242
6.2.3
Research and development in the pharmaceutical industry ..... 1246
6.2.4 Internally
generated brands, mastheads, publishing titles and
customer lists ........................................................................................ 1247
6.2.5
Website costs (SIC-32) ...................................................................... 1248
6.3
Cost of an internally generated intangible asset ........................................... 1250
6.3.1
Establishing the time from which costs can be capitalised ........ 1250
6.3.2
Determining the costs eligible for capitalisation .......................... 1250
7 RECOGNITION OF AN EXPENSE .................................................................. 1251
7.1
Catalogues and other advertising costs .......................................................... 1252
8 MEASUREMENT AFTER INITIAL RECOGNITION ........................................ 1252
8.1
Cost model for measurement of intangible assets ....................................... 1253
8.2
Revaluation model for measurement of intangible assets .......................... 1253
8.2.1
Revaluation is only allowed if there is an active market ............ 1254
8.2.2 Frequency
of
revaluations
................................................................
1255
8.2.3 Accounting
for
revaluations
.............................................................
1255
9 AMORTISATION OF INTANGIBLE ASSETS .................................................. 1257
9.1
Assessing the useful life of an intangible asset as finite or indefinite ....... 1257
Intangible
assets
1211
9.1.1
Factors affecting the useful life ........................................................ 1258
9.1.2
Useful life of contractual or other legal rights ............................. 1260
9.2
Intangible assets with a finite useful life ........................................................ 1261
9.2.1
Amortisation period and method .................................................... 1261
9.2.1.A
Amortising customer relationships and similar
intangible assets .............................................................. 1262
9.2.1.B
Amortisation of programme and other
broadcast rights .............................................................. 1263
9.2.2
Revenue-based amortisation ........................................................... 1264
9.2.3
Review of amortisation period and amortisation method ......... 1266
9.2.4 Residual
value
.....................................................................................
1266
9.3
Intangible assets with an indefinite useful life .............................................. 1267
9.4 Impairment
losses
...............................................................................................
1268
9.5 Retirements
and
disposals................................................................................. 1269
9.5.1
Derecognition of parts of intangible assets ................................... 1270
10 DISCLOSURE ................................................................................................ 1271
10.1 General disclosures ............................................................................................. 1271
10.2 Statement of financial position presentation ................................................ 1274
10.3 Profit or loss presentation ................................................................................. 1275
10.4 Additional disclosures when the revaluation model is applied ................. 1276
10.5 Disclosure of research and development expenditure ............................... 1276
11 SPECIFIC ISSUES REGARDING INTANGIBLE ASSETS .................................. 1276
11.1
Rate-regulated activities .................................................................................... 1276
11.2 Emissions
trading schemes ............................................................................... 1277
11.2.1
Emissions trading schemes – IFRIC 3 ............................................ 1278
11.2.2
Emissions trading schemes – Net liability approaches .............. 1280
11.2.3
Emissions trading schemes – Government grant approach ...... 1282
11.2.4
Amortisation and impairment testing of emission rights ............ 1283
11.2.5
Emission rights acquired in a business combination ................... 1283
11.2.6
Sale of emission rights ....................................................................... 1284
11.2.7
Accounting for emission rights by brokers and traders .............. 1284
11.3 Accounting for green certificates or renewable energy certificates ........ 1285
11.3.1
Accounting by producers using renewable energy sources ....... 1285
11.3.2
Accounting by distributors of renewable energy ......................... 1285
11.3.3
Accounting by brokers and traders ................................................. 1286
11.4 Accounting for REACH costs ........................................................................... 1286
11.4.1
Costs of registering a new substance performed by the
entity itself ........................................................................................... 1287
11.4.2
Costs of acquiring test data from an existing registrant .............. 1288
1212 Chapter 17
11.4.3
Costs of registering an existing substance performed by
the entity itself ..................................................................................... 1288
11.5 Crypto-assets ....................................................................................................... 1288
11.5.1
Crypto-assets – Recognition and initial measurement .............. 1289
11.5.2
Crypto-assets – Subsequent measurement .................................. 1289
11.5.2.A
Crypto-assets – Cost model ........................................ 1289
11.5.2.B
Crypto-assets – Revaluation model ......................... 1290
11.5.3
Crypto-assets – Standard setter activity .......
............................... 1290
List of examples
Example 17.1:
Demonstrating control over the future services of
employees ............................................................................................ 1219
Example 17.2:
Determining when to recognise a broadcast right ....................... 1225
Example 17.3:
Incidental operations ......................................................................... 1229
Example 17.4:
Contingent consideration relating to a football player’s
registration ........................................................................................... 1230
Example 17.5:
Customer relationship intangible assets acquired in a
business combination ........................................................................ 1238
Example 17.6:
Research phase and development phase under IAS 38 .............. 1244
Example 17.7:
Recognition of internally generated intangible assets ................. 1250
Example 17.8:
Application of revaluation model to intangible assets that
are partially recognised or received by way of government
grant ....................................................................................................... 1254
Example 17.9:
Accounting for upward and downward revaluations .................. 1255
Example 17.10:
Restatement of accumulated amortisation after a
revaluation ........................................................................................... 1257
Example 17.11:
Assessing the useful life of an intangible asset .............................. 1259
Example 17.12:
Legal rights and useful life ............................................................... 1260
Example 17.13:
Amortisation method and useful life for customer
relationships......................................................................................... 1263
Example 17.14:
Output-based versus revenue-based amortisation ...................... 1264
Example 17.15:
Amortisation of an intangible asset with a residual value .......... 1267
Example 17.16:
Review of indefinite useful lives ..................................................... 1268
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 239
