The IASB’s Conceptual Framework outlines two fundamental qualitative characteristics that make financial information useful: relevance and faithful representation. These characteristics can be applied to the treatment of intangible assets as follows:

1. Relevance:
   • Intangible assets are often difficult to measure reliably because they may not have an active market. Despite this, they can still provide relevant information if they are expected to bring future economic benefits to the entity. The revaluation model in IAS 38 allows entities to recognize intangible assets at fair value if an active market exists, ensuring that financial statements provide relevant information about the current value of the intangible assets.
2. Faithful Representation:
   • The historical cost model in IAS 38 may be seen as providing a more faithful representation because it is based on actual costs incurred to acquire or develop the intangible asset. However, historical cost might not always be the most relevant basis for decision-making, especially if the fair value of the intangible has changed significantly since acquisition.
   • The strict recognition criteria set out in IAS 38 ensure that only assets that meet certain conditions are recognized. This ensures that intangible assets in the financial statements represent economic resources that the entity controls and from which it is expected to derive future benefits.
3. Comparability:
   • To ensure comparability between entities, IAS 38 requires that all intangible assets be treated consistently across entities within the same class of assets. If an entity chooses the revaluation model for a particular class of intangibles, all assets within that class must be revalued simultaneously. This enhances comparability between entities using the same model.
4. Verifiability:
   • The revaluation model can provide relevant and up-to-date information, but it might be less verifiable because it often requires professional judgment to determine fair value. By contrast, the cost model is based on actual transactions, which makes it more verifiable as it relies on objective evidence.
5. Understandability:
   • Financial statements must be understandable to users. IAS 38 requires clear disclosure of how intangible assets are measured and amortized, as well as any assumptions used in revaluations. This enhances understandability by providing users with a clear picture of how the intangible assets are being accounted for and valued over time.
6. Timeliness:
   • Information about intangible assets must be provided in a timely manner. The requirement to disclose information about the amortization and impairment of intangible assets helps ensure that users have up-to-date information about the value and performance of these assets.

Thus, applying the fundamental qualitative characteristics to the treatment of intangible assets ensures that financial statements provide users with relevant, faithfully represented, comparable, and understandable information about the entity’s economic resources.