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HMRC internal manual

Corporate Intangibles Research and Development Manual

Intangible assets: notes on accounting practice: FRS10/IAS38


FRS10 sets out the principles of accounting for goodwill and intangible assets. Its aims are to ensure that:

  • Capitalised goodwill and intangible assets are charged to the profit and loss account as they are depleted.
  • Sufficient information is disclosed to enable users of the financial statements to determine the impact of goodwill and intangible assets on the financial position and performance of the entity.


FRS10 applies to all financial statements that are intended to give a true and fair view of an entity’s financial position and profit/loss for a period. There is an exemption for smaller enterprises applying the FRS for Smaller Entities, see CIRD30525.

FRS10 does not cover:

  • oil and gas exploration and development costs,
  • research and development costs - see SSAP13,
  • any other intangible assets that are specifically addressed by another standard.


Although not mentioned in the section of FRS10 dealing with its scope, the definitions section effectively excludes software development costs that are directly attributable to bringing a computer system or other computer-operated machinery into working condition for its intended use within the business. These costs are treated instead as part of the cost of the related hardware rather than as a separate intangible asset.

Previous standard

FRS10 was issued in December 1997 and replaced SSAP22 (which applied to goodwill); it details various transitional adjustments that were needed to implement the newrequirements.


The equivalent IAS standard is IAS38. The principle difference between the standards for the purposes of Schedule 29 is that assets with an indefinite life span are not written off on a systematic basis but are instead subject to impairment reviews. (See CIRD30515).