Intellectual Property recognition

Can Intellectual Property be recognised in the Balance Sheet?

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Under FRS102 is it allowable to recognise internally generated goodwill?

The business I work for has spent a lot of money developing its products. it has successfully made R&D claims based on the costs incurred in developing these products. We are considering in using a professional valuer to place a value on the products we have manufactured (which are selling successfully) and then using that valuation as justification to introduce an Intangible Asset ?  If it is allowed, I assume we would debit Intangibles and credit some sort of Reserve account in year 1 and then carry out some sort of imparment review annually?

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By paul.benny
26th May 2021 11:25

Navola wrote:

Under FRS102 is it allowable to recognise internally generated goodwill?

No - at least, not on the basis of a valuation as you suggest.

You might be able to capitalise the costs incurred as an intangible asset - s18.8 of FRS102 sets out the criteria. The standard can be downloaded for free from the FRC website.

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John Toon
By John Toon
26th May 2021 15:41

Also bear in mind that what you're suggesting is not just an accounting issue. If you choose to capitalise costs claimed under a R&D tax claim these will need to be amended as capitalised costs have to be claimed in a different way.

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