CIRD11175 - Intangible assets within FA02/SCH29: asset conditions: options in respect of intangible fixed assets
FA02/SCH29/PARA3 (2)
Options or other rights to acquire or dispose of intangible fixed assets
The general rule that only intangible assets which are ‘fixed assets’ for accounting purposes come within Schedule 29 (see CIRD11170) is subject to an exception for options or other rights (for example a futures contract) to acquire or dispose of an asset which itself counts as an ‘intangible fixed asset’. An option or right of this sort is to be regarded as an intangible fixed asset even though the option or right may not be of a sufficient duration to satisfy clearly the test described in CIRD11170.
Link with legislation on derivative contracts
Options and other rights to acquire or dispose of an asset
within paragraph 3(2) are specifically excluded from the scope of
the rules in FA02/SCH26 on derivative contracts generally (see
FA02/SCH26/PARA4 (2)(c) and PARA12 (9). See CFM11000 onwards and
CFM13250 onwards.
Conversely, option and other rights of this kind, which are
in respect of assets outside Schedule 29, are themselves outside
Schedule 29 (see
CIRD25010).
Where the subject matter of an option or other right to
acquire or dispose of an asset is partly an intangible fixed asset
and partly another asset the option will fall partly within
Schedule 29 and partly within the rules in Schedule 26. Both
Schedules permit apportionment of the contract in these
circumstances on a just and reasonable basis. In practice, it
should be accepted that an apportionment which meets the
requirements of FA02/SCH26/PARA45 and PARA46 -see CFM11000 onwards
and CFM13250 onwards - also meets those of Schedule 29 (see
CIRD25015).
Other derivative contracts
Other derivative contracts, for example a contract for
differences, whose underlying subject matter is an intangible fixed
asset, will normally be accounted for as financial assets and
therefore excluded from Schedule 29. See
CIRD25050.
Where valuation of intangible assets is an issue see
CIRD10240.
