Under AASB 138 Intangible Assets, which of the following would be recognised as an intangible asset?Group of answer choicesAnnual fees to maintain a customer list originally developed by a companyAmount paid to a competitor to acquire the copyright for a screen playAn impairment loss due to declining circulation rates of a mastheadSubsequent expenditure on the internally generated “Big X” brandname
Question
Under AASB 138 Intangible Assets, which of the following would be recognised as an intangible asset?Group of answer choicesAnnual fees to maintain a customer list originally developed by a companyAmount paid to a competitor to acquire the copyright for a screen playAn impairment loss due to declining circulation rates of a mastheadSubsequent expenditure on the internally generated “Big X” brandname
Solution
Under AASB 138 Intangible Assets, the amount paid to a competitor to acquire the copyright for a screenplay would be recognised as an intangible asset.
An intangible asset is a non-physical asset that has a useful life greater than one year. These assets are generally long term and can include copyrights, patents, trademarks, and brand recognition.
In this case, the copyright for a screenplay is a legal right that prevents others from using the screenplay without permission. This right is identifiable, non-monetary, and has control over a resource (the screenplay) from which future economic benefits (profits from the screenplay's use) are expected to flow to the entity (the company that bought the copyright). Therefore, it meets the definition of an intangible asset under AASB 138.
The other options do not meet the criteria for an intangible asset under AASB 138. Annual fees to maintain a customer list are considered expenses, not assets. An impairment loss due to declining circulation rates of a masthead is a decrease in the value of an asset, not an asset itself. Subsequent expenditure on the internally generated “Big X” brand name would not be recognised as an intangible asset under AASB 138 because it prohibits the recognition of internally generated brands.
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