What are the different types of intangible assets?
Frequently Asked Question

What are the different types of intangible assets?

There are three types of intangible asset: 

Leases; distribution agreements; employment contracts; covenants; financing arrangements; supply contracts; licenses; certifications; franchises.

Trained and assembled workforce; customer and distribution relationships.

Intellectual Property:
Trademarks; patents; copyrights; proprietary technology (e.g. formulas; recipes; specifications; formulations; training programs; marketing strategies; artistic techniques; customer lists; demographic studies; product test results; business knowledge - processes; lead times; cost and pricing data; trade secrets and know-how).

Internally generated intangible assets

Most intangible assets that appear on balance sheets have been acquired, however some internally generated intangible assets can be capitalised provided they can be reliably valued and the costs in creating them be distinguished from maintenance costs or general expenses. This means the most frequently seen are software and patents or other forms of technological IP.

This results in what is sometimes described as 'internally generated goodwill'. This is the difference between the fair market value of a business and the value of its identifiable balance sheet net assets. The treatment of this goodwill only changes if the company is acquired, converting the goodwill from internally-generated to acquired.

Acquired Intangible Assets

As specified in IFRS 3: Business Combinations, intangible assets of the three types above should be identified, valued and then grouped into the following classifications upon acquisition:

  • Artistic-related intangible assets
  • Marketing-related intangible assets
  • Technology-based intangible assets
  • Customer-related intangible assets
  • Contract-based intangible assets

There is then a balancing figure which is referred to as Goodwill. Prior to 2008, all intangible assets were referred to as Goodwill.

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