ASC 730

An intangible investment — R&D, brand-build, customer-acquisition with measurable payback, software development — that has been moved from operating expense to balance-sheet asset and amortised over its useful life under management accounting. Statutory accounting rarely permits the same treatment for internally-generated intangibles: IAS 38 imposes six conservatism criteria that are difficult to meet in practice; ASC 730 forces immediate expensing under US GAAP.

An intangible asset created within the business (R&D output, brand, customer relationships, organisational know-how) rather than acquired through a transaction. IAS 38 conservatism rules make these difficult to capitalise on statutory books — six development-cost capitalisation criteria must all be met.

An analytical framework that decomposes economic or firm-level output growth into contributions from labour, capital, and a residual factor often interpreted as technological progress or total factor productivity. Growth accounting is fundamental to understanding how intangible investments — in R&D, software, organisational design, and human capital — drive productivity improvements.

Development costs are the expenditure incurred applying research findings to a plan or design for a new or substantially improved product, service, process or system before it enters commercial production or use. Under IAS 38 (IFRS — the default framework for UK groups reporting under adopted IFRS), the standard divides the work into two phases and treats them differently.

Internal-use software is software a business acquires or develops for its own operations rather than to sell or licence. Under US GAAP, ASC 350-40 sets a stage-based model.

The number of months a company takes to recover its customer acquisition cost from gross profit on the cohort acquired. Calculated as CAC ÷ (monthly gross profit per customer).

The system of statistical methods used to measure a country's overall economic activity, including Gross Domestic Product (GDP), Gross National Income (GNI), and related aggregates. National income accounting provides the framework for tracking economic output, income distribution, saving, investment, and international trade flows.

The extent to which resources are distributed to their highest-value uses across an economy or within a firm. In growth accounting, improvements in allocative efficiency — particularly the reallocation of capital toward intangible-intensive activities — are a significant driver of productivity gains.

AI and IAS 38: When Can You Capitalise AI Development Costs?

IAS 38 sets six criteria for capitalising development costs, but applying them to AI projects is fraught with ambiguity. This article maps each criterion to AI development realities and provides practical guidance for CFOs and accountants navigating the recognition question.

How does AI create intangible asset value for businesses?

AI creates intangible value by generating proprietary models, training data, algorithms, and automated workflows that improve efficiency, reduce costs, and create competitive moats that are difficult for competitors to replicate.

What is FRS 102 and how does it differ from full IFRS for intangible assets?

FRS 102 is the UK accounting standard for non-listed companies. Unlike full IFRS, it requires goodwill amortisation (max 10 years if life cannot be estimated) and sets a narrower test for recognising intangibles in a business combination.

How does Opagio's Productivity Calculator work?

The calculator uses growth accounting methodology to decompose your revenue and GVA growth into contributions from labour, capital, and Total Factor Productivity (TFP).