IAS 38 Intangible asset

NotesVideoQuizPaper exam

What is an Intangible asset?

Well, according to IAS 38, it’s an identifiable non-monetary asset without physical substance, such as a licence, patent or trademark.

The three critical attributes of an intangible asset are:

  1. Identifiability

  2. Control (power to obtain benefits from the asset)

  3. Future economic benefits

Whooah there partner, what´s identifiable mean??

Well it just means the asset is one of 2 things:

  1. It is SEPARABLE, meaning it can be sold or rented to another party on its own (rather than as part of a business) or

  2. It arises from contractual or other legal rights.

It is the lack of identifiability which prevents internally generated goodwill being recognised. It is not separable and does not arise from contractual or other legal rights.

Examples

  • Employees can never be recognised as an asset; they are not under the control of the employer, are not separable and do not arise from legal rights

  • A taxi licence can be an intangible asset as they are controlled, can be sold/exchanged/transferred and arise from a legal right
    (The intangible doesn’t have to be separable AND arise from a legal right, just one or the other is enough).

NotesVideoQuizPaper exam