IAS 38 and ASC 350 are the foundational standards governing how companies recognise, measure, and report intangible assets on their balance sheets. While both aim to ensure faithful representation of intangible value, they take meaningfully different approaches in several areas — particularly around revaluation, research and development, and impairment testing.
Accounting Framework
IAS 38 vs ASC 350: Intangible Asset Recognition
IAS 38 vs ASC 350 for intangible asset accounting. How the international and US standards differ on recognition, measurement, amortisation, and impairment.
| Criteria | IAS 38 (Intangible Assets) | ASC 350 (Intangibles — Goodwill and Other) |
|---|---|---|
| Scope | All intangible assets (excluding those covered by other standards) | Goodwill and other intangible assets not covered by other topics |
| Recognition — internally generated | Research expensed; development capitalised if 6 criteria met | Research and development generally expensed (ASC 730); software development capitalised under ASC 985/ASC 350-40 |
| Revaluation model | Permitted if active market exists (rarely used in practice) | Not permitted — cost model only |
| Useful life | Finite or indefinite — annual reassessment required | Finite or indefinite — reassessed when events indicate change |
| Amortisation | Finite-life assets amortised; indefinite-life assets not amortised | Finite-life assets amortised; indefinite-life assets not amortised |
| Impairment test — indefinite-life | Annual test under IAS 36 (compare recoverable amount to carrying value) | Annual test — optional qualitative screen, then quantitative if needed |
| Impairment reversal | Permitted for intangible assets (not goodwill) | Not permitted for any intangible assets |
When to Use Each Approach
IAS 38 (Intangible Assets)
- Company reports under IFRS
- Capitalisation of development costs is relevant (e.g., software, pharma)
- Revaluation of intangible assets is being considered
ASC 350 (Intangibles — Goodwill and Other)
- Company reports under US GAAP
- SEC reporting requirements apply
- Software development capitalisation under US rules
Our Verdict
The most impactful difference for many companies is the treatment of development costs — IAS 38 allows capitalisation (potentially boosting reported assets and profits), while US GAAP generally requires expensing. The prohibition on impairment reversal under ASC 350 also creates asymmetric outcomes. Companies operating across jurisdictions must reconcile these differences carefully.
Related Glossary Terms
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