Intangible Assets and Goodwill: Q3

Q3: A key feature of Intangible assets are that they are identifiable. What does it mean for Intangible assets to be ‘identifiable’?

A:

To be able to be identified, Intangible assets need to have some separate identity to the rest of the business of which they form a part. There are two ways Intangible assets can have this ‘separate identity’ and thus be ‘identifiable’. They need to either be able to be separated from a business and be able to be sold or otherwise transacted with other parties; or, alternatively arise from a contractual or legal right (even if those rights cannot be transferred to others). Being able to be separated from a business and transacted with on its own or in conjunction with another asset or liability, is shown in the first part of the definition of ‘identifiable’:

“An asset is identifiable if it either:

(a) is separable, ie is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or …”

AASB 138 para 12

In cases where an asset without physical substance may not be separable from the rest of a business, it can still be identifiable if it arises from some legal basis:

“An asset is identifiable if it either: … 

(b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.”

AASB 138 para 12

Study Guide Chap 5 page 5-17

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