3.4.3—Intangible assets
- Syllabus
- First assessment 2024
- Objective
- 3.4.3
- Level
- SL
Intangible assets have value without a physical form
An intangible asset is a non-current resource without physical substance, such as a patent, licence, brand or development-related right. Its value comes from expected future benefits, not from its material form.
Recognition depends on control, identifiable rights and evidence that future benefits are probable and measurable. The asset may be amortised over its useful life; uncertain internally generated reputation is not automatically recorded as an asset.
A purchased licence used for five years can be allocated as an expense across that period, reducing the carrying amount as benefits are consumed. A valuable idea that cannot be separately controlled may remain an expense rather than a balance-sheet asset.
Intangible does not mean imaginary, and a strong reputation does not automatically become a recorded asset. Goodwill normally arises when one business acquires another for more than the fair value of its identifiable net assets; internally generated reputation may be valuable without meeting recognition criteria.