SFRS(I) 1-38 prescribes the accounting treatment for intangible assets that are not dealt with specifically in another standard — identifiable non-monetary assets without physical substance, such as patents, licences, software, and certain development costs. As value increasingly resides in intellectual property, the recognition, measurement, and amortisation of intangibles matter more and more — a point of particular relevance to Singapore's technology, media, and knowledge-intensive sectors. It is the Singapore equivalent of IAS 38 under IFRS, and is in substance IAS 38 as applied in Singapore.
Objective and scope
The objective is to prescribe the accounting treatment for intangible assets not dealt with specifically in another standard. An intangible asset is an identifiable non-monetary asset without physical substance. Certain intangibles are outside its scope where covered by other standards — for example, goodwill acquired in a business combination (SFRS(I) 3) and financial assets (SFRS(I) 9).
Recognition and initial measurement
An intangible asset is recognised if, and only if, it is probable that expected future economic benefits will flow to the entity, and the cost can be measured reliably. The item must also be identifiable (separable, or arising from contractual or legal rights) and controlled by the entity. Identifiability distinguishes an intangible asset from goodwill. An intangible asset is measured initially at cost.
Internally generated intangibles — research and development
SFRS(I) 1-38 draws a firm line between research and development. Research phase expenditure is expensed when incurred. Development phase expenditure gives rise to an intangible asset only if the entity can demonstrate all of: the technical feasibility of completing the asset; its intention to complete and use or sell it; its ability to use or sell it; how it will generate probable future economic benefits; the availability of adequate resources to complete it; and its ability to measure reliably the expenditure attributable to it. Otherwise, development expenditure is expensed. Internally generated goodwill, brands, mastheads, customer lists, and similar items are not recognised.
Useful life — finite and indefinite
An intangible asset with a finite useful life is amortised on a systematic basis over that life, with residual value generally assumed to be zero. An intangible asset with an indefinite useful life is not amortised — "indefinite" means no foreseeable limit to the period over which the asset is expected to generate net cash inflows, not "infinite". Instead, it is tested for impairment at least annually (under SFRS(I) 1-36), and the indefinite-life assessment is reviewed each period.
The revaluation model
After recognition, an entity chooses either the cost model (cost less accumulated amortisation and impairment) or the revaluation model for a class of intangibles. The revaluation model applies only where fair value can be determined by reference to an active market — which is rare for intangibles, so the model is seldom available. Revaluation increases are recognised in other comprehensive income.
A worked example
A Singapore company holds three intangibles:
| Intangible | Useful life | Treatment |
|---|---|---|
| Acquired patent (S$500,000) | Finite — 10 years | Amortised S$50,000 / year |
| Acquired well-established brand | Indefinite | Not amortised; impairment-tested annually |
| Internal research costs | — | Expensed as incurred |
| Internal development costs | — | Capitalised only if all six conditions met |
The acquired patent has a finite 10-year life and is amortised at S$50,000 a year. The acquired brand is assessed as having an indefinite useful life (no foreseeable limit to its cash flows), so it is not amortised but is tested for impairment annually. The internal research costs are expensed, and development costs are capitalised only once all six conditions are met.
How SFRS(I) 1-38 relates to IFRS
SFRS(I) 1-38 is identical to IAS 38 under IFRS — the same recognition criteria, the same research-versus-development distinction, the same finite-versus-indefinite useful life treatment, and the same availability of the revaluation model. An entity familiar with IAS 38 will find SFRS(I) 1-38 to be the same standard.
Common pitfalls
Recurring issues include capitalising research expenditure; capitalising development expenditure without demonstrating all the required conditions; recognising internally generated brands, customer lists, or goodwill; treating an indefinite-life intangible as if it must be amortised (or failing to test it for impairment annually); and applying the revaluation model without an active market.
Why this is cleaner on a unified system
Accounting for intangible assets — tracking cost, distinguishing research from development, capitalising eligible development costs, amortising finite-life assets, and impairment-testing indefinite-life assets — is more reliable when the project cost records and the ledger sit in one connected system. When development expenditure is captured against the project in a single source of truth and flows into the asset records and the accounts, applying the recognition conditions, determining useful lives, and producing the reconciliations for disclosure is more straightforward than reconciling separate project ledgers against the accounts.
This article is a detailed educational summary of SFRS(I) 1-38 in plain language. It is not a substitute for the full text of the standard. Accounting standards are amended from time to time; always verify the current, authoritative text of SFRS(I) 1-38 as issued by the Singapore Accounting Standards Council before relying on it, and consult a qualified professional accountant for application to your specific circumstances.