The Corrado-Hulten-Sichel (CHS) framework and IFRS 3 classification represent two fundamentally different ways of categorising intangible assets. CHS was developed by economists to measure intangible investment across the economy; IFRS 3 was designed by accountants to ensure faithful recognition in business combinations. Understanding both is essential for anyone bridging the gap between strategic asset management and financial reporting.
Accounting Framework
CHS Framework vs IFRS 3 Classification
CHS economic taxonomy vs IFRS 3 accounting classification for intangible assets. Strategic investment analysis versus compliance-driven PPA categories.
| Criteria | Corrado-Hulten-Sichel (CHS) Framework | IFRS 3 Classification |
|---|---|---|
| Origin | Academic economics (Corrado, Hulten, Sichel, 2005/2009) | Accounting standards (IASB) |
| Purpose | Measure total intangible investment (including unrecognised) | Classify acquired intangible assets for balance sheet recognition |
| Categories | 6: Computerised information, innovative property, economic competencies (each split into 2) | 5: Marketing-related, customer-related, artistic-related, contract-based, technology-based |
| Scope | All intangible investment — including internally generated and expensed items | Only acquired intangible assets meeting separability or contractual-legal test |
| Workforce treatment | Included (as firm-specific human capital under economic competencies) | Excluded — assembled workforce subsumed in goodwill |
| Typical user | Economists, strategists, boards, growth-stage companies | Auditors, valuers, CFOs, acquirers in M&A transactions |
When to Use Each Approach
Corrado-Hulten-Sichel (CHS) Framework
- Strategic planning and intangible asset investment tracking
- Board-level reporting on intangible capital growth
- Benchmarking intangible investment against industry peers
- Productivity analysis and growth accounting
IFRS 3 Classification
- Purchase price allocation following a business combination
- Financial statement preparation under IFRS
- Impairment testing of acquired intangible assets
- Regulatory compliance and audit defence
Our Verdict
These frameworks are complementary, not competing. Use CHS for strategic investment visibility — it captures the full spectrum of intangible capital including items accounting standards ignore. Use IFRS 3 classification for compliance in business combinations. The most effective approach uses both: CHS for management decisions, IFRS 3 for financial reporting.
Related Glossary Terms
Learn More
Ready to Value Your Intangible Assets?
Use Opagio's valuation tools to apply these methods to your own business.