Intangiable Assets

Intangible Assets

What is an asset?

Assets are rights, or other access to the future economic benefits controlled by an entity as a result of past transactions or events.

‘Control’ in the definition of an asset encompasses both the right to obtain the benefits and the ability to restrict access to them by others. It does not necessarily imply the ability to sell the item separately from other assets of the company.

What is an intangible asset?

Intangible assets are non-monetary fixed assets that do not have a physical substance but are identifiable and are controlled by the entity through custody and legal rights.

The standard goes on to introduce the notion of separability by defining identifiable assets as those that can be disposed of separately without disposing of a business of the entity.

The ASB provides ‘a team of skilled staff’ as an example where, although it is expected that future benefits will flow to the entity, the entity would not have sufficient control over the benefits to allow it to recognize the staff as an intangible asset.

One exception to the recognition of staff as assets exists for football players acquired through the transfer market. In this case, the nature of the contract between the player and the club means that the company is able to exercise sufficient control over the player.

Recognition means reporting an item by means of words and figures within the main financial statements in such a way that the item is included within the arithmetic totals.

Examples of intangible assets

• Patents and trademarks

• Goodwill

• Brand names

• Mastheads and publishing titles

• Computer software

• Licences and franchises

• Recipes,formulae, models, designs and prototypes; and

• Intangibe assets under development

The Statement of Principles splits the recognition of assets and liabilities into three stages:

1. Initial recognition (i.e....