IPSAS 31
Active
Intangible Assets
Prescribes recognition and measurement of intangible assets held for use in the public sector – including the IPSAS-specific three-part intangible-asset test, separate versus combination acquisition, internally generated assets (research vs development), and the choice between historical-cost and current-value models. Effective 1 April 2011. (IAS 38 equivalent, adapted for the public sector.)
Active Standard
IPSAS 31 Intangible Assets is the current, active standard issued by the IPSASB for recognising and measuring intangible assets in the public sector – including the IPSAS-specific three-part intangible-asset test, internally generated assets, and the historical-cost / current-value model choice. Effective for periods beginning on or after 1 April 2011 (earlier application permitted). Paras. 1–133.
IPSAS 31 is the IPSASB's adaptation of IAS 38 Intangible Assets for the public sector – retaining the IAS 38 recognition and valuation framework but adding the public-sector three-part intangible-asset test, the heritage-assets commentary and the explicit allowance for the current-value model.
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Objective, Scope & Intangible Heritage Assets (paras. 1–15)
Objective & scope (para. 1)
Prescribes the accounting for INTANGIBLE ASSETS held for use in the public sector – recognising them when probable that future economic benefits will flow and the cost/value can be measured reliably, and measuring them under historical cost or current value.
Key definitions
Intangible asset
Identifiable non-monetary asset without physical substance.
Heritage asset
A depreciating, renewable resource or a non-depreciating cultural asset treated as an intangible.
Scope exclusions
ExcludedInstead, see…
Goodwill from combinationsIPSAS 40
Bearer plantsIPSAS 27
Financial instrumentsIPSAS 28/41
IPSAS 31 adds a public-sector three-part intangible-asset test (control, identifiability, probable future benefits) on top of the IAS 38 framework.
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Definitions & the Three-Part Intangible Asset Test (paras. 16–27)
The IPSAS three-part test (para. 16)
An intangible asset is recognised when ALL hold: (a) the entity controls the resource; (b) it is identifiable (separable or arising from contractual/legal rights); and (c) it is probable future economic benefits will flow.
ControlIdentifiabilityProbable future benefits
Measurement is REQUIRED before recognition – an unmeasurable intangible is not recognised (no 'best estimate' placeholder).
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Recognition & Separate Acquisition (paras. 28–39)
Acquired separately (para. 28)
An intangible acquired in a separate (non-combination) transaction is recognised at cost – the consideration received plus, where applicable, transaction costs. If the asset's fair value cannot be measured reliably, it is not recognised.
Cost
Purchase price plus directly attributable costs, including estimates for dismantling/use.
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Acquisition as Part of a Combination & via Non-Exchange Transactions (paras. 39A–47)
Combination = FV (para. 39A)
SituationMeasurement
Acquisition in a combinationFair value at acquisition date
Non-exchange transactionFair value of the asset received
Goodwill arisingIPSAS 40 (not 31)
For a combination, the intangible's cost is its fair value at the acquisition date; any goodwill is a combination issue.
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Internally Generated Intangible Assets – Research vs Development Phase (paras. 49–62)
Research vs development (para. 49)
Research expenditure is EXPENSED as incurred. Development expenditure is CAPITALISED only if it meets the six IAS 38(57) criteria (technical feasibility, intention to complete, ability to use/sell, future economic benefits, reliable measurement, and adequate resources). The IPSASB added public-sector commentary on 'public interest' outcomes.
ResearchExpense – no assetDevelopment (criteria met)Capitalise costDevelopment (criteria failed)Expense
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Cost of an Internally Generated Intangible Asset (paras. 63–70)
Build-up of cost (para. 63)
The cost of a capitalised development asset includes: expenditure to date that meets the criteria, directly attributable to the creation of the asset, and interest during the period of development where the asset qualifies as a 'qualifying asset' (IPSAS 5 commentary applies).
ElementNature
Direct expenditureMaterials, staff, subcontracts
Attributable borrowingsIPSAS 5 capitalisation (if qualifying)
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Subsequent Measurement – Historical Cost & Current Value Models (paras. 71–86)
Two measurement models (para. 71)
An entity chooses, for each class of intangible assets, either the HISTORICAL COST model (subsequent cost less amortisation and impairment) or the CURRENT VALUE model (revalued amount = fair value at date of revaluation less subsequent amortisation/impairment). Revaluations must be revalued regularly to fair value.
Switching models mid-life is treated as a change in accounting policy; the IPSASB requires public-sector justification for the current-value model (heritage asset rationale).
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Useful Life – Finite vs Indefinite (paras. 87–95A)
Amortise or not (para. 87)
An intangible with a finite useful life is amortised over that life (review annually for changes). An intangible with an INDEFINITE life is NOT amortised – it is tested annually for impairment (para. 88). The IPSASB adds a rebuttable presumption that heritage assets have indefinite lives unless demonstrated otherwise.
Amortisation
Systematic distribution of an asset's carrying amount over its useful life.
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Amortization, Impairment & Retirements/Disposals (paras. 96–116)
Review points (para. 96)
EventAction
Finite life assetAmortise; review life annually
Indefinite life assetAnnual impairment test (IPSAS 26)
Retirement/disposalDerecognise gain/loss
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Disclosure Requirements (paras. 117–127)
What users need (para. 117)
Disclose the accounting policy (model chosen per class), the carrying amount, amortisation method/charge, impairment recognised, revaluation surplus, and the nature/amount of internally generated intangibles not recognised. For heritage assets, disclose the revaluation surplus and the actuarial assumptions used.
Heritage assets require the extra IPSAS 31 disclosures on revaluation surplus classification and the assumed remaining useful life.
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Transitional Provisions, Effective Date & Amendment Timeline (paras. 128–133)
Timeline
DateEvent
Jan 2010Issued
1 Apr 2011Effective date
2025Amended (latest)
Transitional: adopt retrospectively at deemed cost (IPSAS 33 transition guidance).
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Relationship to IAS/IFRS – Comparison with IAS 38
Key adaptations
IAS 38 recognition criteriaIPSAS 31 same + 3-part testIAS 38 heritage assetsIPSAS 31 explicitIAS 38 current valueIPSAS 31 permitted model
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Statement / Process Mapping
Where it flows
ProcessLedger
Asset intakeAsset Register → Cost/Value
Development trackingProject System → Capitalise decision
Yearly revaluationAnnual Valuation → Revaluation Reserve
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Related Standards – Cross-Reference Map
See also
StandardRelation
IPSAS 33First-time adoption transition
IPSAS 40Goodwill from combinations
IPSAS 41Hedge of intangible-related cash flows
IAS 38Direct equivalent
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Quick-Reference Glossary
Intangible asset
Asset without physical substance; identifiable & separable or from rights.
Development
Expenditure capitalisable if six IAS 38(57) criteria met.
Current value model
Revalued amount = FV less amortisation/impairment.
Indefinite life
Not amortised; tested annually for impairment.
Heritage asset
Cultural/non-depreciable resource under IPSAS 31.
Amortisation
Systematic allocation over useful life.