As per the previous blog, we now know the key characteristics of intangible assets as per IAS38.


However, Internally generated assets key characteristics and recognition can be challenging, as it could be hard to predict whether they will generate future economic benefits. Hence, additional requirements apply to all internally generated assets.

Therefore, the development of internally generated assets can be classified into two phases

  1. Research Phase

The research phase (IAS38, para.8) defined as any original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.
Those intangible assets are not recognized, as they cannot demonstrate that the asset will generate future economic benefits. The research phase must be expensed when it is incurred. (IAS38 para.54)


  1. Development Phase

Development Phase (IAS38, para8) is defined as any research finding to plan the production of new or improved materials, devices, services, etc.

Intangible assets can only be recognized development phase if

  • Technically feasible to complete the intangible asset for use
  • Intention to complete or sell it
  • Ability to use
  • Intangible asset will produce future economic benefits.
  • Ability to reliably measure the expenditure on the development of intangible asset

IAS38, para.71 states that previously recognized expense cannot be reinstated as a part of intangible assets once it recognized at a later date

Website Development Cost

The website is recognized as an intangible asset if an entity must demonstrate that the website will produce future economic benefits. In short, if we cannot place an order through the website then criteria are not met & development costs must be expensed.

If you have any questions, regarding Internally generated intangible assets or want us to help you with your bookkeeping needs, then, should you not hesitate to contact us on 03 9310 7871 or visit our website www.reliablebookkeepingservices.com.au for more information.

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