Definition
Intangible assets are non-physical fixed assets a business holds for use in operations. They include software (acquired or internally-developed where capitalisation criteria are met), patents, trademarks, copyrights, customer relationships acquired in a business purchase, brand names, and goodwill. They are presented on the balance sheet at cost less accumulated amortization (for definite-life intangibles) or at fair value less impairment (for indefinite-life intangibles such as goodwill under IFRS).
What intangible assets mean in practice
For a bookkeeper, intangible assets are the part of the balance sheet that requires the most judgment to maintain. The recognition criteria under IFRS 38 (and the equivalent FRS 102 Section 18 and ASPE Section 3064) are strict: internally-generated intangibles cannot be capitalised unless they meet specific development-phase tests. Most marketing, training, customer-relationship-building, and similar internally-generated value sits as an expense on the P&L rather than as an intangible on the balance sheet.
Acquired intangibles are easier. Software licences bought for cash, patents acquired from a third party, customer lists acquired in a business purchase, and goodwill arising from a business combination all post to the intangibles section at cost. They are amortised over their useful lives (definite-life) or impairment-tested annually (indefinite-life, including goodwill under full IFRS).
A practical example: a UK SaaS business acquires a smaller competitor for 800,000 in 2026-27. The fair value of identifiable net assets (cash, AR, equipment) is 200,000. The remaining 600,000 is allocated: 150,000 to acquired customer relationships (definite-life, 5 years), 100,000 to acquired technology (definite-life, 3 years), 350,000 to goodwill. Under FRS 102, the customer relationships amortise at 30,000 per year, the technology at 33,333 per year, and the goodwill at 35,000 per year (10-year amortisation). Total annual amortisation: 98,333.
How intangible assets work by country
United Kingdom
FRS 102 Section 18 governs intangibles for medium and large entities (full IFRS 38 for IFRS adopters). Strict recognition criteria for internally-generated intangibles: capitalise only research-and-development costs that meet the development-phase tests (technical feasibility, intention to complete, ability to use or sell, future economic benefits, adequate resources, ability to measure cost reliably). Goodwill is amortised over up to 10 years under FRS 102; impairment-tested only under full IFRS. The Corporate Intangible Fixed Assets tax regime provides parallel tax deduction for intangibles acquired after April 2002.
Australia
AASB 138 governs intangibles. Most internally-generated intangibles (other than capitalised development costs meeting the AASB 138 criteria) are expensed as incurred. Tax treatment under Division 40 of the Income Tax Assessment Act 1997 prescribes effective lives for in-house software (4 years) and other intangibles. Goodwill is not amortised under AASB; annual impairment testing applies.
Canada
ASPE Section 3064 governs intangibles for private companies; IAS 38 governs public companies and IFRS adopters. CRA Class 14.1 (5% declining balance with the half-year rule) covers most intangibles for tax purposes since 1 January 2017 (it replaced the Eligible Capital Expenditure regime). Class 14 (straight-line over patent life) covers patents specifically.
New Zealand
NZ IAS 38 mirrors IAS 38. The IRD’s fixed-life intangible regime covers software with a defined useful life for tax purposes; the schedule of fixed-life intangible asset depreciation rates applies. Internally-generated software development costs that meet capitalisation criteria are amortised; research costs are expensed.
Singapore
SFRS(I) 38 mirrors IAS 38. Section 19A(2) of the Income Tax Act covers IT and software for tax (two-year write-off in qualifying years of assessment). Section 19B governs intellectual property writing-down allowances (5 years straight-line for IP acquired since 2013).
Related terms
Intangible assets are one half of the fixed-asset category:
- Amortization is the periodic expense for definite-life intangibles.
- Goodwill is the largest intangible category for businesses that have done acquisitions.
- Fixed assets is the broader category that includes both tangible and intangible long-lived assets.
- Depreciation is the tangible-asset equivalent of amortisation.
- Capital expenditure is the cash outlay that may create an intangible asset.
- The balance sheet is where intangibles appear under non-current assets.
See also
For the periodic expense recognition on intangibles, see the amortization entry. For goodwill specifically, see the goodwill entry.
FAQ
See the answered questions above for IFRS 38 recognition criteria, internally-generated intangibles, and the goodwill distinction.