An intangible asset is an identifiable non monetary asset without physical substance.
Guidelines for recognition, measurement and disclosure on intangible assets is given in IAS 38 intangible assets.
An asset is defined under the conceptual framework as a resource controlled by an entity as a result of past transactions and events, and from which future economic benefits are expected to flow to the entity.
An asset of any kind is identifiable if it either:
- Is separable, meaning that it can be separated from the business and sold individually, or
- Arise from contractual or other legal rights, even if these are not separable or transferable.
Internally generated goodwill even if it has value , it is not considered as intangible asset under IAS 38 because it is not identifiable.
Intangible assets have become increasingly significant in recent years. particular development in the business world have led to growing value provided by knowledge, know how and processes at the relative expense of tangible assets such as property and machinery. Many of the world,s most valuable businesses depend to massive degree on the value of their intangibles.
Example of intangible asset include brand names, software, licences, franchises, copyrights, patents and so forth.