Recognition of an Expense on Intangible Asset :

Expenditure on an intangible item should be recognized as an expense when it is incurred unless:

(a) it forms part of the cost of an intangible asset that meets the recognition criteria;

(b) the item is acquired in an amalgamation in the nature of purchase and cannot be recognized as an intangible asset.

If this is the case, this expenditure (included in the cost of acquisition) should form part of the amount attributed to goodwill (capital reserve) at the date of acquisition.

In some cases, expenditure is incurred to provide future economic benefits to an enterprise, but no intangible asset or other asset is acquired or created that can be recognised. In these cases, the expenditure is recognised as an expense when it is incurred. For example, expenditure on research is always recognised as an expense when it is incurred. Examples of other expenditure that is recognised as an expense when it is incurred include:

(a) expenditure on start-up activities (start-up costs), unless this expenditure is included in the cost of an item of fixed asset. Start-up costs may consist of preliminary expenses incurred in establishing a legal entity;

(b) expenditure on training activities;

(c) expenditure on advertising and promotional activities; and

(d) expenditure on relocating or re-organising part or all of an enterprise.