A non-monetary asset without physical substance.

PAS 38 Intangible Assets Intangible resources such as scientific or technical

Essential Elements of an Intangible Asset
•IDENTIFIABILITY – Intangible asset must be
identifiable in order to clearly distinguish from
goodwill.
•Rises from contractual or other legal rights.
•CONTROL – Entity has the ability to collect/obtain
future economic benefits from intangible assets or
prevent others from having the benefit of the asset.
•Employee’s skills
•Customer Loyalty
•Technical and Market knowledge
•FUTURE ECONOMIC BENEFIT – Intangible assets that
may include revenues, cost savings, or other benefits
resulting from entity’s use of asset.
w/ Research & Development Costs
•Identifiable Intangible Assets•
- Acquired by purchase. If the
asset was sold, transferred,
licensed or rented, the intangible
asset is identifiable.
*Patent, franchise, trademark
and software.
•Development Cost – Application
of research to plan or design for
the production of new improved
materials, products and processes
before the start of commercial
production. Can be capitalized if..
•Technical feasibility of
completing the intangible asset.
•Ability to use or sell intangible
asset.
•Probable future economic
benefits
•Reliable measurement of the
cost of the intangible asset.
•Availability of resources needed
to complete the development.
knowledge, new processes or systems, intellectual
property, market knowledge and trademarks.
•Unidentifiable Intangible Assets•
-If cannot be sold, transferred, RECOGNITION – Intangible asset recognized
licensed, rented or exchanged,
when meets the definition of “Intangible asset”
this un-intangible asset is
and “Asset recognition criteria”.
identifiable as a goodwill.
•Intangible assets are initially measured at cost.
•Research Cost – Planned Also can be acquired through:
investigation undertake with
prospect of gaining new •Acquisition by exchange – Measured at fair
knowledge and understanding value with given cash payments.
that will be useful in developing
new product or improve existing •Acquisition of a Government grant – Free of
product. charge or with consideration.
•Search alternatives for
materials, devices, products and •Acquisition as part of business combination –
processes. Based of fair value on date of acquisition.
•Obtain new knowledge
•Formulation and evaluation of •Separate acquisition – Purchase consideration
in the form of cash or other monetary assets.
possible alternatives for
new/improved materials,
products and processes.

Classification of Intangible Asset

•Intangible Asset with definite life (Patent, copyright, franchise)
•Intangible Asset with indefinite life (Goodwill and perpetual
franchise)