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Non-current assets: Acquisition and depreciation

Intangible non-current assets

4.1 Overview

IAS 38 Intangible Assets defines an intangible asset as 'an identifiable non-
monetary asset without physical substance' (IAS 38 para 8), for example
trademarks, patents and licences.

 Intangibles can be purchased or internally generated, e.g. brand names.

 As a general rule, purchased intangibles are capitalised whereas internally
generated intangibles are not recognised in the financial statements.

 When the cost and expected useful life of an intangible asset can be reliably
measured, the must be amortised to reflect the using up or wearing out of that
asset.

 Examples of intangible assets include: goodwill, development costs, brands,
copyrights, licences and trademarks.

In effect, amortisation is really the same as depreciation but a term
used in relation to intangible assets.

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