Similarities
The definition of intangible assets as non-monetary assets without physical substance is the same under both US GAAP’s ASC 805 Business Combinations (formerly FAS 141(R)) and ASC 350 Intangibles — Goodwill and Other (formerly FAS 142) and the IASB’s IFRS 3(R) and IAS 38 Intangible Assets.
The recognition criteria for both accounting models require that there be probable future economic benefits and costs that can be reliably measured. However, some costs are never capitalized as intangible assets under both models, such as start-up costs.
Goodwill is recognized only in a business combination in accordance with ASC 805 and IFRS 3(R). With the exception of development costs (addressed in the following table), internally developed intangibles are not recognized as an asset under either ASC 350 or IAS 38. Moreover, internal costs related to the research phase of research and development are expensed as incurred under both accounting models.
Amortization of intangible assets over their estimated useful lives is required under both US GAAP and IFRS, with one minor exception in ASC 985-20 Costs of Computer Software to be Sold, Leased or Marketed (formerly FAS 86) related to the amortization of computer software sold to others. In both, if there is no foreseeable limit to the period over which an intangible asset is expected to generate net cash inflows to the entity, the useful life is considered to be indefinite and the asset is not amortized. Goodwill is never amortized.
Significant differences
Convergence
While the convergence of standards on intangible assets was part of the 2006 “Memorandum of Understanding” (MOU) between the FASB and the IASB, both boards agreed in 2007 not to add this project to their agendas. However, in the 2008 MOU, the FASB indicated that it will consider in the future whether to undertake a project to eliminate differences in the accounting for research and development costs by fully adopting IAS 38 at some point in the future.
