128 An entity is encouraged, but not required, to disclose the following information:
(a) a description of any fully amortised intangible asset that is still in use; and
(b) a brief description of significant intangible assets controlled by the entity but not recognised as assets because they did not meet the recognition criteria in this Standard or because they were acquired or generated before the version of IAS 38 Intangible Assets issued in 1998 was effective.
Transitional Provisions and Effective Date
129 If an entity elects in accordance with paragraph 85 of IFRS 3 Business Combinations to apply IFRS 3 from any date before the effective dates set out in paragraphs 78-84 of IFRS 3, it also shall apply this Standard prospectively from that same date. Thus, the entity shall not adjust the carrying amount of intangible assets recognised at that date. However, the entity shall, at that date, apply this Standard to reassess the useful lives of its recognised intangible assets. If, as a result of that reassessment, the entity changes its assessment of the useful life of an asset, that change shall be accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

130 Otherwise, an entity shall apply this Standard:
(a) to the accounting for intangible assets acquired in business combinations for which the agreement date is on or after 31 March 2004; and
(b) to the accounting for all other intangible assets prospectively from the beginning of the first annual period beginning on or after 31 March 2004. Thus, the entity shall not adjust the carrying amount of intangible assets recognised at that date. However, the entity shall, at that date, apply this Standard to reassess the useful lives of such intangible assets. If, as a result of that reassessment, the entity changes its assessment of the useful life of an asset, that change shall be accounted for as a change in an accounting estimate in accordance with IAS 8.
Exchanges of Similar Assets
131 The requirement in paragraphs 129 and 130(b) to apply this Standard prospectively means that if an exchange of assets was measured before the effective date of this Standard on the basis of the carrying amount of the asset given up, the entity does not restate the carrying amount of the asset acquired to reflect its fair value at the acquisition date.
Early Application

132 Entities to which paragraph 130 applies are encouraged to apply the requirements of this Standard before the effective dates specified in paragraph 130. However, if an entity applies this Standard before those effective dates, it also shall apply IFRS 3 and IAS 36 Impairment of Assets (as revised in 2004) at the same time.
Withdrawal of IAS 38 (issued 1998)
133 This Standard supersedes IAS 38 Intangible Assets (issued in 1998).

Approval of IAS 38 by the Board
International Accounting Standard 38 Intangible Assets was approved for issue by thirteen of the fourteen members of the International Accounting Standards Board. Professor Whittington dissented. His dissenting opinion is set out after the Basis for Conclusions on IAS 38.
Sir David Tweedie Chairman
Thomas E Jones Vice-Chairman
Mary E Barth
Hans-Georg Bruns
Anthony T Cope
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O'Malley
Harry K Schmid
John T Smith
Geoffrey Whittington
Tatsumi Yamada

Basis for Conclusions on IAS 38 Intangible Assets
Contents
INTRODUCTION BC1-BC3
DEFINITION OF AN INTANGIBLE ASSET BC4-BC5
IDENTIFIABILITY BC6-BC14
Background to the Board's deliberations BC7-BC8
Clarifying identifiability BC9-BC10
Non-contractual customer relationships BC11-BC14
CRITERIA FOR INITIAL RECOGNITION BC15-BCZ46
Acquisition as part of a business combination BC16-BC25
Probability recognition criterion BC17-BC18
Reliability of measurement recognition criterion BC19-BC25
Separate acquisition BC26-BC28
Internally generated intangible assets BCZ29-BCZ46
Background on the requirements for internally generated intangible assets BCZ30-BCZ32
Combination of IAS 9 with the Standard on intangible assets BCZ33-BCZ35
Consequences of combining IAS 9 with IAS 38 BCZ36-BCZ37
Recognition of expenditure on all internally generated intangible assets as an expense BCZ38
Recognition of internally generated intangible assets BCZ39
IASC's view in approving IAS 38 BCZ40-BCZ41
Differences in recognition criteria for internally generated intangible assets and purchased intangible assets BCZ42
Initial recognition at cost BCZ43-BCZ44
Application of the recognition criteria for internally generated intangible assets BCZ45-BCZ46
SUBSEQUENT ACCOUNTING FOR INTANGIBLE ASSETS BC47-BC77
Accounting for intangible assets with finite useful lives acquired in business combinations BC50-BC59
Impairment testing intangible assets with finite useful lives BC54-BC56
Residual value of an intangible asset with a finite useful life BC57-BC59
Useful lives of intangible assets BC60-BC72
Useful life constrained by contractual or other legal rights BC66-BC72
Accounting for intangible assets with indefinite useful lives BC73-BC77
Non-amortisation BC74-BC75
Revaluations BC76-BC77
RESEARCH AND DEVELOPMENT PROJECTS ACQUIRED IN BUSINESS COMBINATIONS BC78-BC89
Initial recognition separately from goodwill BC80-BC82
Subsequent accounting for IPR;D projects acquired in a business combination and recognised as intangible assets BC83-BC84
Subsequent expenditure on IPR;D projects acquired in a business combination and recognised as intangible assets BC85-BC89
TRANSITIONAL PROVISIONS BC90-BC102
Early application BC101-BC102
SUMMARY OF MAIN CHANGES FROM THE EXPOSURE DRAFT BC103
HISTORY OF THE DEVELOPMENT OF A STANDARD ON INTANGIBLE ASSETS BCZ104-BCZ110
Basis for Conclusions on IAS 38 Intangible Assets
The International Accounting Standards Board revised IAS 38 as part of its project on business combinations. It was not the Board's intention to reconsider as part of that project all of the requirements in IAS 38.
The previous version of IAS 38 was accompanied by a Basis for Conclusions summarising the former International Accounting Standards Committee's considerations in reaching some of its conclusions in that Standard. For convenience the Board has incorporated into its own Basis for Conclusions material from the previous Basis for Conclusions that discusses (a) matters the Board did not reconsider and (b) the history of the development of a standard on intangible assets. That material is contained in paragraphs denoted by numbers with the prefix BCZ. Paragraphs describing the Board's considerations in reaching its own conclusions are numbered with the prefix BC.

Introduction
BC1 This Basis for Conclusions summarises the International Accounting Standards Board's considerations in reaching the conclusions in IAS 38 Intangible Assets. Individual Board members gave greater weight to some factors than to others.
BC2 The International Accounting Standards Committee (IASC) issued the previous version of IAS 38 in 1998. It has been revised by the Board as part of its project on business combinations. That project has two phases. The first has resulted in the Board issuing simultaneously IFRS 3 Business Combinations and revised versions of IAS 38 and IAS 36 Impairment of Assets. Therefore, the Board's intention in revising IAS 38 as part of the first phase of the project was not to reconsider all of the requirements in IAS 38. The changes to IAS 38 are primarily concerned with:
(a) the notion of 'identifiability' as it relates to intangible assets;
(b) the useful life and amortisation of intangible assets; and
(c) the accounting for in-process research and development projects acquired in business combinations.

BC3 With the exception of research and development projects acquired in business combinations, the Board did not reconsider the requirements in the previous version of IAS 38 on the recognition of internally generated intangible assets. The previous version of IAS 38 was accompanied by a Basis for Conclusions summarising IASC's considerations in reaching some of its conclusions in that Standard. For convenience, the Board has incorporated into this Basis for Conclusions material from the previous Basis for Conclusions that discusses the recognition of internally generated intangible assets (see paragraphs BCZ29-BCZ46) and the history of the development of a standard on intangible assets (see paragraphs BCZ104-BCZ110). The views expressed in paragraphs BCZ29-BCZ46 and BCZ104-BCZ110 are those of IASC.

Definition of an intangible asset
(paragraph 8)
BC4 An intangible asset was defined in the previous version of IAS 38 as "an identifiable non-monetary asset without physical substance held for use in the production or supply of goods or services, for rental to others, or for administrative services". The definition in the revised Standard eliminates the requirement for the asset to be held for use in the production or supply of goods or services, for rental to others, or for administrative services.
BC5 The Board observed that the essential characteristics of intangible assets are that they:
(a) are resources controlled by the entity from which future economic benefits are expected to flow to the entity;
(b) lack physical substance; and
(c) are identifiable.
The Board concluded that the purpose for which an entity holds an item with these characteristics is not relevant to its classification as an intangible asset, and that all such items should be within the scope of the Standard.
Identifiability
(paragraph 12)

BC6 Under the Standard, as under the previous version of IAS 38, a non-monetary asset without physical substance must be identifiable to meet the definition of an intangible asset. The previous version of IAS 38 did not define 'identifiability', but stated that an intangible asset could be distinguished from goodwill if the asset was separable, but that separability was not a necessary condition for identifiability. The revised Standard requires an asset to be treated as meeting the identifiability criterion in the definition of an intangible asset when it is separable, or when 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.
Background to the Board's deliberations

BC7 The Board was prompted to consider the issue of 'identifiability' as part of the first phase of its Business Combinations project as a result of changes during 2001 to the requirements in Canadian and United States standards on the separate recognition of intangible assets acquired in business combinations. The Board observed that intangible assets comprise an increasing proportion of the assets of many entities, and that intangible assets acquired in a business combination are often included in the amount recognised as goodwill, despite the requirements in IAS 22 Business Combinations and IAS 38 for them to be recognised separately from goodwill. The Board agreed with the conclusion reached by the Canadian and US standard-setters that the usefulness of financial statements would be enhanced if intangible assets acquired in a business combination were distinguished from goodwill. Therefore, the Board concluded that the IFRS arising from the first phase of the Business Combinations project should provide a definitive basis for identifying and recognising intangible assets acquired in a business combination separately from goodwill.