Chapter 15 - Intangibles

Abstract

This chapter focuses on intangible assets, which are defined as non-financial fixed assets that do not have a physical substance, but are identifiable and are controlled by an entity through custody or legal rights. The capitalization of internally developed brands and publishing titles is not permitted under FRS 10 Goodwill and Intangible Assets, but purchased brands and titles can be capitalized if their fair value can be established. Examples of intangible assets include patents, trade marks, copyright, licenses and quotas, and franchises. An intangible asset may be revalued if it has a readily ascertainable market value, as defined in the standard, provided that all other capitalized intangible assets in the same class are revalued at the same time. Intangible assets that have been capitalized should be amortized over their expected useful economic lives, with the amortization charged to the profit and loss account on a systematic basis. An intangible asset that is regarded as having an indefinite useful economic life should not be amortized. Intellectual property enables businesses and individuals to protect the rights that they hold in their own inventions, creations and ideas and to sell them in the same way as other assets. It gives the holder the exclusive right to benefit from the property and to control the access to it, and use of it, by other parties and the use of protected rights can be granted to others by license. Patents are used to protect inventions, including new and improved processes, and must be formally registered in order to take effect. Trademarks are used to distinguish the products or services of different businesses but are not protected unless they have been registered.