1.5 Intangible Assets

The table below shows the differences that exist between IFRS Accounting Standards and U.S. GAAP in several key areas of intangible assets, including (1) advertising costs, (2) development costs, (3) in-process research and development (IPR&D) costs, and (4) revaluation.

Topic	IFRS Accounting Standards (IAS 38)	U.S. GAAP (ASC 350, ASC 720, ASC 985-20)
Advertising costs	Advertising costs are expensed as incurred. A prepaid asset can be recognized when payment has been made “in advance of the entity obtaining a right to access those goods [or] receiving those services” (emphasis added).	Advertising costs are either expensed as incurred or expensed the first time the advertising takes place (policy choice), with the exception of direct-response advertising.
Development costs	Regardless of the type of cost and industry, an entity capitalizes development costs only when it can demonstrate all the following criteria: The technical feasibility of completing the intangible asset so that it will be available for use or sale. The entity’s intention to complete the intangible asset and use or sell it. The entity’s ability to use or sell the intangible asset. How the intangible asset will generate probable future economic benefits (e.g., the entity can demonstrate a market for the output). The availability of adequate technical, financial, and other resources to complete the intangible asset’s development and to use or sell it. The entity’s ability to reliably measure the intangible asset’s costs during its development.	Development costs are generally expensed as incurred. An exception to that principle exists for software costs: Costs to develop computer software for external use are capitalized once technological feasibility is established in accordance with the criteria in ASC 985-20. For development costs of internally used software, only those costs incurred during the application development stage may be capitalized.
Initial measurement — IPR&D costs	An entity is permitted to capitalize IPR&D costs in an asset acquisition or a business combination.	An entity is permitted to capitalize IPR&D costs only when acquired in a business combination.
Subsequent measurement — revaluation	Intangible assets may be revalued to fair value only if they trade in an active market. Revaluation changes are recognized directly in equity and are required for all assets in the same class if an active market exists.	Intangible assets are carried at their historical costs, and revaluation is not permitted.