Philippine Public Sector Accounting Standard 31

INTANGIBLE ASSETSTable of Contents

PAG Number

BACKGROUND

INTRODUCTION TO THE IPSAS 31

PHILIPPINE APPLICATION GUIDANCE TO IPSAS 31

Scope1

Subsequent Measurement2

Intangible Assets with Finite Useful Lives

Amortization Method3

Effective Date4

Philippine Public Sector Accounting Standard 31INTANGIBLE ASSETS

Background

This Philippine Public Sector Accounting Standard (PPSAS) 31 consists of International Public Sector Accounting Standard (IPSAS) 31, Intangible Assets, and the Philippine Application Guidance (PAG) prepared to suit the Philippine public sector situation.

The IPSAS 31 was issued in January 2010 by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC). This includes amendments resulting from IPSASs issued up to January 15, 2012.The PAG (in italics) provides supplementary guidance on the proper implementation of IPSAS 31.

Introduction to the IPSAS 31

IPSAS 31 prescribes the accounting treatment for intangible assets that are not dealt with specifically in another Standard. It prescribes the principle for its recognition and measurement as well as its disclosure requirements.Philippine Application Guidance to IPSAS 31

Scope

PAG1. Paragraph 4 deals with the applicability of this Standard to all public sector entities other than Government Business Enterprises (GBEs). GBE is an entity that has all the following characteristics: (a) Is an entity with the power to contract in its own name; (b) Has been assigned the financial and operational authority to carry on a business; (c) Sells goods and services, in the normal course of its business, to other entities at a profit or full cost recovery; (d) Is not reliant on continuing government funding to be a going concern (other than purchases of outputs at arms length); and (e) Is controlled by a public sector entity. This standard shall be applied to all National Government Agencies (NGAs), Local Government Units (LGUs) and Government-Owned and/or Controlled Corporations (GOCCs) not considered as GBEs. Subsequent Measurement

PAG2. Paragraph 71 of the standard allows a choice of accounting models for measurement of intangible asset subsequent to acquisition: cost model (paragraph 73): the asset is carried at cost less accumulated depreciation and impairment losses; or

revaluation model(paragraph 74): the asset is carried at revalued amount, which is fair value at revaluation date less subsequent depreciation and impairment losses. It requires that fair values be determined by reference to an active market and that such revaluations be made with such regularity. For simplicity and uniformity of application, the cost model shall be adopted.Intangible Assets with Finite Useful LivesAmortization Method

PAG3. Paragraph 97 mentions a number of amortization method from which the agency may choose on the basis of the expected pattern of consumption of the expected future economic benefits or service such as: straight line method, diminishing balance method, and the unit of production method.

For uniformity, the straight line method of amortization shall be adopted.

Effective DatePAG4. This PPSAS shall apply for annual financial statements covering periods beginning January 1, 2014.

Public Sector Auditing Standards Board

(PSSB Auditing)

PPSAS 31 - Intangible Assets

January 2014

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