The intangible asset should be measured initially at cost. The cost of an internally generated intangible asset for this purpose is the sum of expenditure incurred from the time when the intangible asset first meets the recognition criteria. Here it should be carefully noted that the internally generated goodwill is not recognized as an intangible asset. Goodwill is only recognized in the books when a monetary value has been paid for the same. Intangible assets that are used for the purpose of in-process research and development which have been obtained by the organization are required to be recognized in a way that is separated from goodwill if those assets can be separated from the business (Midanik, 2008).
If any item does not meet the definition of an intangible asset and the expenditures are incurred for acquiring that assets then that expenditures will be recognized as the expenses of the organization and will be charged against the profits of the relevant period. These expenses will be shown in the profit and loss account not in balance sheet. This implies that expenses will not be treated either as capital expenditures or cost of intangible assets. Purchases price of assets, import duties and other taxes like non-refundable purchase tax are considered in the cost of intangible assets. For finding out the total cost of intangible asset the trade discount and rebates are deducted from the total cost of asset(Jaafar and Halim, 2012). Any directly articulable expenditure on making the assets ready for its intended use for example, for bringing the assets into working condition, professional fees incurred for checking the asset whether it is working in a proper manner or not and employee benefit expenses for bringing the asset to its current working position are considered in the value of the intangible asset.