Uzbek NAS No. 7 “Intangible Assets”: Requirements Explained

What counts as an intangible asset

An intangible asset is an identifiable item of property without physical substance that the company holds for a long period for production, work, services, sale of goods or administrative functions (paragraph 5). All conditions of paragraph 6 must be met at the same time:

• no physical substance;
• long-term use — a useful life of more than 12 months;
• a cost per unit (set) at acquisition of at least fifty times the BCV; the head of the company may set a lower threshold for the reporting period;
• not intended for resale;
• properly executed documents confirming the asset and the exclusive right to it (patents, certificates, a trademark purchase agreement);
• the item is identifiable — it is separable from the company or arises from contractual or other legal rights (paragraph 7).

Which items are included

The list in paragraph 10 covers exclusive rights to inventions, industrial designs and utility models, software and databases, integrated circuit layouts, trademarks and service marks, and plant breeding achievements, as well as goodwill, rights to use natural resources and land plots, and other intangibles.

A key point for IT: software that is an integral part of an item of property, plant and equipment is accounted for together with that asset. If the software is not part of a fixed asset and the exclusive right belongs to the company, it is an intangible asset (paragraph 11). Staff qualifications and skills are never intangible assets.

The standard does not apply to research and development costs (accounted for under NAS No. 11), to leases under NAS No. 6, or to deferred expenses (paragraph 4).

Initial cost

All intangible assets are recognized at initial cost (paragraph 14). For a purchased asset it consists of actual costs (paragraph 15):

• amounts paid to the right holder (seller) under the agreement;
• registration fees, patent duties and similar payments;
• customs duties and fees, non-recoverable taxes;
• information and consulting services, fees paid to intermediaries;
• insurance of the delivery (creation) risk and other costs of bringing the asset to working condition.

What is excluded from cost and special cases

• Letter of credit costs, bank commissions for transfers and currency conversion, and costs not directly related to the acquisition are expensed in the period (paragraph 15).
• Interest on a loan used to buy a finished intangible is not capitalized; interest accrued during development of the asset is capitalized (paragraph 15).
• Under deferred payment terms, the asset is recognized at the price without deferral, and the difference is charged to finance costs over the payment period (paragraph 15).
• A purchase in foreign currency is translated at the Central Bank rate on the acquisition date, while the portion paid in advance is translated at the rate on the advance date (paragraph 17 as amended by order registration No. 3607 of 11.02.2025).
• A contribution to charter capital is measured at the monetary value agreed by the founders (paragraph 19); an asset received free of charge is measured at reliably determined current value (paragraph 20).

Amortization: start, useful life, methods

Amortization starts on the first day of the month following the month in which the item is recognized and stops on the first day of the month after the cost is fully recovered or the item is derecognized (paragraphs 41–42). It is charged regardless of the period’s financial result (paragraph 44).

Useful life is set on recognition, based on the term of the patent or certificate, other legal restrictions and the period over which the company expects benefits (paragraph 47). If the useful life cannot be determined, the amortization rate is set on the basis of five years; for goodwill the useful life must not exceed twenty years (paragraphs 47, 66).

Permitted methods (paragraphs 48–49): straight-line, units of production, and, for intensive use, accelerated methods — double declining balance and sum-of-the-years’-digits. One method is applied to a homogeneous group of intangibles (paragraph 53). The method chosen and the possibility of revising useful life must be stated in the accounting policy (paragraph 54); useful life is reviewed at year-end when expectations change significantly (paragraph 56).

Subsequent costs, revaluation and disposal

• Improvement costs that increase expected benefits and useful life are added to the cost of the asset (paragraph 27); costs of keeping the asset in working order are period expenses (paragraph 38).
• After recognition, an intangible is carried at cost less accumulated amortization or at a revalued amount; the model chosen is stated in the accounting policy (paragraph 26).
• A revaluation increase goes to reserve capital through account 8510; a decrease beyond previously accumulated increases goes to other operating expenses (paragraph 34).
• Rights received under a licence agreement are recorded by the user off-balance sheet, and periodic payments are expensed (paragraph 61).
• The gain or loss on disposal is proceeds less carrying amount, indirect taxes and disposal costs (paragraph 68).
• An inventory count of intangibles is carried out periodically, but at least once every two years (paragraph 69).

Accountant’s checklist

• test each item against all conditions of paragraph 6, including documents on the exclusive right;
• set in the accounting policy the cost threshold (if lower than 50 BCV), amortization methods and the subsequent measurement model;
• separate licensed rights (off-balance sheet) from acquired exclusive rights (on balance sheet);
• capitalize only permitted costs and expense bank commissions;
• schedule useful-life reviews and inventory counts.