Intangible assets recognition
10 An intangible asset is recognized if:
- It is probable that the expected future economic benefits that are attributable to the asset will flow to WHO;
- The cost of the asset can be measured reliably;
- Is separable and controlled by WHO
- The asset has an estimated useful life of more than one year; and
- The cost exceeds US$ 100 000.
20 WHO has identified seven categories of assets that meet the requirements under IPSAS as intangible assets. At WHO these intangible assets are divided into two groups: 1) Copyrights and license agreements, trademarks, patents and website development, these intangible assets are not capitalized as they are considered immaterial. 2) Software licenses, including software purchased from a third party (externally) will be capitalized.
Software licenses
30 Software licenses are purchased on a regular basis from software vendors to ensure the continued use of software products.
40 As the purchase price of licenses is defined and the expectation exists that the software license will provide a future economic benefit, WHO capitalizes the costs of software licenses if it exceeds US $100 000 and has a useful life greater than one year. Licenses are amortized on a straight-line basis.
50 The following costs are eligible for capitalization as part of the total software cost:
- Purchase price (in the case of in kind donations, the fair value of the asset acquired)
- Shipping
- Direct costs incurred to prepare the asset for its intended use
60 Post implementation activities: Costs associated with post implementation activities on externally purchased software are not capitalized, but rather expensed when incurred.
70 Ongoing support and maintenance: WHO expenses all costs associated with new version releases and maintaining functionality on existing software products as these costs are considered to be ongoing support and maintenance costs which do not meet the definition of an intangible asset under IPSAS.
Software internally developed
80 Software is developed by WHO's IT department according to WHO's specific business needs and whether there are available software packages in the external market.
90 Initial development: Given the complex nature of IT projects makes it impossible to isolate the work allocation between eligible and non-eligible activities (therefore the ability to measure reliably the expenditure attributable to the intangible asset is impossible), and because the asset cannot be separated from WHO's regular operations, all costs associated with internally developing software are expensed as incurred.
100 Post implementation activities: WHO may customize or enhance features to existing internally developed software.
110 WHO does not capitalize these costs as an intangible asset. All costs related to this activity are expensed as incurred.
120 Total cost consists of the asset purchase price and any directly attributable costs (such as the cost of preparation, initial delivery or software installation costs) of bringing the intangible asset to working condition for its intended use.
130 Where an intangible asset is acquired through a non-exchange transaction (as a gift, contribution, or donation), the fair value of the asset as at the date of acquisition is used.
Intangible assets amortization
140 Intangible assets of WHO are amortized, using the straight line method over their estimated useful lives, starting from the month of acquisition or when the intangible asset becomes operational. The rates are as per below:
|
INTANGIBLE
ASSETS CLASSES
|
ESTIMATED
USEFUL LIFE (YEARS)
|
|
Software
acquired externally
|
2-6
|
150 WHO intangible assets are assumed to have a residual value of zero.
160 An intangible asset with an indefinite useful life is not amortized.
Intangible assets impairment
170 An impairment loss is recognized whenever the recoverable amount falls materially below the carrying amount of the intangible asset (book value). The impairment loss is recognized as an expense in the Statement of Financial Performance.
Exclusions
180 Cloud-based software is used on a subscription
basis and is not controlled by the Organization. Costs incurred to configure or
customize cloud-based software as a service are recognized as operating
expenses when the services are received. Non-cancellable subscription fees are
expensed at the time of invoicing.
