Route 102 – One man’s year-long journey……Day 79

  • By Jeremy Williams
  • 09/09/2015

To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).

DAY 79 (9 Sep)

Did you guess the words from the last post? They're 'AND' and 'OR'. Allow me to explain...

FRS 10 para 2 defines intangible assets as:

'Non-financial fixed assets that do not have physical substance but are identifiable (which is defined in the following paragraph as a separable asset) AND are controlled by the entity through custody or legal rights.'

FRS 102 para 18.2 defines an intangible asset differently, as:

'An identifiable non-monetary asset without physical substance. Such an asset is identifiable when: (a) it is separable... OR it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.'

So a key part of the old GAAP definition is that the asset must come with custody or legal rights. No control, no asset.

In FRS 102, this is only one option - an item which is separable but does not arise from contractual or legal rights is still (at least potentially) an intangible asset. This doesn't guarantee that the item will make it onto the balance sheet - there are further criteria to satisfy - but at least it's not ruled out from the start.

P.S. If you missed the last instalment click here

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