Criteria for and Categories of Identifiable Intangible Assets

Criteria for Identifiable Intangible Assets

For an identifiable intangible asset to be classified as an asset and be allocated a value, a number of fundamental criteria must be satisfied.
The criteria are that the asset:
  • is specifically identifiable and recognisable
  • is subject to legal existence and protection
  • is subject to the right of private ownership, which is legally transferable
  • has tangible evidence of existence
  • is created at an identifiable time or as the result of an identifiable event
  • is subject to being destroyed or to a termination of existence
  • confers a commercial benefit to the owner of the asset.

Categories of Identifiable Intangible Assets

  1. Marketing-related intangible assets (e.g. trademarks, trade names, brand names, logos).
  2. Technology-related intangible assets (e.g., process patents, patent applications, technical documentation, such as laboratory notebooks, technical know-how).
  3. Artistic-related intangible assets (e.g., literary works and copyrights, musical compositions, copyrights, maps, engravings).
  4. Data processing--related intangible assets (e.g., proprietary computer software, software copyrights, automated databases, integrated circuit masks and masters)
  5. Engineering-related intangible assets (e.g., industrial design, product patents, trade secrets, engineering drawings and schematics, blueprints, proprietary documentation).
  6. Customer-related intangible assets (e.g., customer lists , customer contracts, customer relationships, open purchase orders).
  7. Contract-related intangible assets (e.g., favourable supplier contracts, license agreements, franchise agreements, non-compete agreements).
  8. Human capital-related intangible assets (e.g., a trained and assembled workforce, employment agreements, union contracts).
  9. Location-related intangible assets (e.g., leasehold interests, mineral exploitation rights, easements, air rights, water rights).
  10. Goodwill-related intangible assets (e.g., institutional goodwill, professional practice goodwill, personal goodwill or a professional, celebrity goodwill, general business going-concern value).

Intellectual Property

The definition of intellectual property varies with the circumstances. To some, intellectual property includes:
  • Brandnames & Trademarks
  • Mastheads
  • Designs
  • Broadcast Licences
  • Franchises
  • Software
  • Non-compete Agreements
  • Patents
  • Know-how
However, according to the Australian Income Tax Assessment Act of 1997, intellectual property is limited to:
  • Patents
  • Registered Designs
  • Copyright
Because of these distinctions, it is important to determine the purpose and circumstance of the valuation.