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INTANGIBLES

DEFINITION

Identifiable non-monetary assets withoutphysical substance

and

controlled by the enterprise as a result of apast event

expected future economic benefits

(clearly separate from goodwill)

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INTANGIBLES

RECOGNITION probable that economic benefits will flow

cost can be reliably measured

MEASUREMENT

Initially at cost

 ± Separate acquisition

 ± Business combination

 ± Internally generated

Research is expensed

Development costs are capitalised if six conditions met

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INTANGIBLES

ALWAYS EXPENSE:

- Research costs

- Pre-opening costs (unless PPE)

- Establishment costs

- Training costs- Advertising

- Relocation/restructuring

- Internally generated:

- Customer lists- Brands,

- Mastheads, Publishing titles

- Goodwill

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INTANGIBLES

IMPAIRMENT

Apply principles on impairment

Recoverable amount estimated at each balance

date for intangibles:

 ± not yet in use

 ± Indefinite life intangibles

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NON-CURRENT ASSETS HELD

FOR SALE

Non-current asset (or disposal group) wherecarrying amount will be recovered through sale.

MEASUREMENT

at the lower of: fair value less costs to sell, and

carrying amount.

TREATMENT

Held for sale¶s not depreciated

Separate presentation on balance sheet of 

assets & liabilities

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GOODWILL

Purchase price less fair value of netassets and contingent liability.

Negative goodwill ± no longer exists (since2004). Now called µBargain purchase

option¶ and shown as income in income

statement

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SPUR 2006

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SPUR 2006

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FULL GOODWILL METHOD

Not a policy choice !!!

Sub has net assets of R4m

Parent pays R3m for 60% of business

Fair value of 40% is R1.8m

100% 60% 40%

NAV 4 000 2 400 1 600

Cost 3 000 1 800

Goodwill 600 200

Current status 2009

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INVENTORIES

DEFINITION

 Assets held for sale in the ordinary course of 

business, in the process of production for such

sale, or in the form of materials or supplies to be

consumed in the production process or inrendering of services.

COST

= purchase price + costs incurred in bringing the

inventories to their present location and condition.

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INVENTORIES

Lower of Cost or Net realisable value

FIFO, Weighted average, LIFO, Standard cost and Retailmethod

Cost of inventory expense incl:

 ± cost of units sold

 ± unallocated overheads ± abnormal wastage costs

 ± write down to NRV

 ± reversal of write down

Disclose: ± cost of sales

 ± write-downs & reversals of write downs

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DISTELL 2010

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