In this episode 🎙️, we step into the world of non-physical assets 👻💼.

From software 💻 and licenses 📜 to brands 🏷️ and goodwill 🤝, we break down how companies decide what to capitalize 📈 and what to expense immediately 💥.

This is where IAS 38 meets IAS 36 — the mandatory health check for assets you can’t see or touch 🔍.

If you don’t understand this intersection, you’re guessing on half the exam questions.

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Key subjects covered:

• The “Identifiable” Test 🧩

What makes an intangible asset separate from the rest of the business?

It must be separable or arise from contractual/legal rights. No identification = no asset.

• Research vs. Development 🧪➡️🏗️

Why research is always expensed 💸

But development can be capitalized — if (and only if) strict criteria are met under IAS 38.

• Amortization Models ⏳

Finite life = amortize over useful life 📉

Indefinite life = no amortization 🚫

But don’t get comfortable… impairment still applies.

• The Impairment Intersection 🚨

Indefinite-life intangibles (like brands 🏷️) and goodwill 🤝 must be tested annually for impairment — even if there’s no obvious trigger.

• Indicators of Impairment 🔎

External signs (market decline 📉, regulatory change 📜)

Internal signs (underperformance 📊, obsolescence ⚙️)

• Presentation & Disclosure 📘

How to group intangible assets by class and explain assumptions clearly in the notes — examiners love disclosure traps.

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🔥 A Pro-Tip for your SOCPA Prep

Use the “PIRATE” mnemonic 🏴‍☠️ for the IAS 38 Development Criteria.

To capitalize development costs, you must prove all six:

1️⃣ Probable future economic benefits 📈

2️⃣ Intention to complete ✔️

3️⃣ Resources available 💰

4️⃣ Ability to use or sell 🔄

5️⃣ Technical feasibility 🛠️

6️⃣ Expenditure measurable reliably 📊

Miss one?

Expense it 💥

This is a binary test. The examiner is not grading effort — they are grading evidence.

If you can’t justify all six, capitalization is wrong.