Intangible Assets: Types, Valuation & Accounting
Intangible assets are identifiable non-monetary assets without physical substance. They include patents, trademarks, customer relationships, proprietary technology, brand equity, and more. This hub covers how they are classified under IFRS 3 and IAS 38, how they are valued for M&A and reporting, and what they mean for your business’s true worth.
Definition
Intangible assets are identifiable non-monetary assets without physical substance — patents, trademarks, software, brands, customer relationships and licences. Under IAS 38, an item qualifies when the entity controls it and expects future economic benefits. Goodwill sits outside the definition: it is the unidentifiable residual recognised only on acquisition.
What Are Intangible Assets?
Under IAS 38, an intangible asset must satisfy three criteria: it must be identifiable (separable or arising from contractual rights), controlled by the entity, and expected to generate future economic benefits. This definition is deliberately narrower than the broader concept of intangible capital — it excludes internally generated goodwill, human capital, and many organizational investments.
In a purchase price allocation (PPA) under IFRS 3 or ASC 805, acquirers must identify and fair-value all intangible assets separately from goodwill. The five classes used in formal valuations are: marketing-related, customer-related, artistic-related, contract-based, and technology-based intangibles. Each class has distinct valuation methodologies, useful life assumptions, and amortisation profiles.
For SMEs, understanding intangible asset classification matters beyond M&A. It shapes IP strategy, R&D capitalisation decisions, brand investment, and how management accounts present the assets that actually drive growth — none of which appear on a conventional balance sheet.
Common Intangible Asset Types
Each asset type has distinct legal protection, useful life, valuation approach, and accounting treatment. Understanding the differences is essential for both strategic management and formal valuation.
Patents
Legally protected inventions granting exclusive use for up to 20 years. Valued using the Relief-from-Royalty method or MPEEM in M&A contexts.
Definition →Trademarks & Brand
Registered trade marks and brand equity provide indefinite useful life under IFRS. Brand value is typically assessed via Relief-from-Royalty or the Royalty Relief method.
Definition →Customer Relationships
Contractual and non-contractual customer lists, repeat purchase patterns, and distribution arrangements. Valued using MPEEM with churn-adjusted customer lifetime value.
Definition →Proprietary Technology
Internally developed software, algorithms, and technical know-how. Useful life typically 3–10 years. Capitalisation governed by IAS 38 development-phase criteria.
Definition →Trade Secrets
Confidential business information providing competitive advantage: formulas, processes, methods, and know-how. Indefinite life subject to ongoing protection measures.
Definition →Copyrights
Exclusive rights over original creative works including software source code, content, and artistic works. Life typically tied to the creator’s life plus 70 years.
Definition →Valuation Methods
Three primary approaches are used to value intangible assets in formal contexts. The right method depends on the asset type, available data, and the purpose of the valuation.
Relief-from-Royalty (RFR)
Values the asset as the present value of royalties the owner is “relieved” from paying because they own the asset. Most common for brands and patents.
Read definition →Multi-Period Excess Earnings (MPEEM)
Isolates cash flows attributable to the primary intangible after accounting for contributory asset charges. Preferred for customer relationships and developed technology.
Related: Goodwill →Cost Approach
Values the asset at the cost to replace or recreate it. Used for workforce-in-place, assembled workforce, and internal-use software when market data is unavailable.
Read definition →Featured Articles
Practical guides and expert analysis on intangible asset types, valuation, and accounting standards.
AI Valuation Methods
Four proven approaches for valuing AI assets in M&A: Relief from Royalty, MPEEM, Cost, and Market. With worked examples and asset-type matching guidance.
Compare methods →AI Capitalisation Guide
Should you capitalise AI development costs? A practical decision guide covering IAS 38 development-phase criteria and ASU 2025-06.
Read the guide →Intangible Asset Categories
The complete taxonomy of intangible asset types with IFRS 3 / ASC 805 classification, valuation methods, and useful life benchmarks for each class.
Explore the taxonomy →Key Glossary Terms
Essential definitions for understanding intangible asset types, accounting standards, and valuation concepts.
IAS 38 (Intangible Assets)
The IFRS standard governing recognition, measurement, and disclosure of intangible assets.
Goodwill
The residual value paid in an acquisition after all identifiable assets and liabilities are recognised at fair value.
Amortisation
The systematic allocation of an intangible asset’s cost over its useful life, analogous to depreciation for physical assets.
Identified Intangible Asset
An intangible asset that is separable or arises from contractual rights, as defined under IFRS 3 / ASC 805.
Brand Equity
The incremental value a brand name adds to a product or service beyond its functional attributes.
Relief-from-Royalty Method
A valuation technique that values an intangible as the present value of royalty payments avoided by owning the asset.
Common Questions About Intangible Assets
What are intangible assets?
Intangible assets are identifiable non-monetary assets without physical substance — patents, trademarks, software, brands, customer relationships and licences. Under IAS 38, an item qualifies when the entity controls it and expects future economic benefits. Goodwill sits outside the definition: it is the unidentifiable residual recognised only on acquisition.
What are examples of intangible assets?
Common examples are patents, registered trade marks and brand equity, copyrights, proprietary software and technology, trade secrets and know-how, customer relationships and contracts, licences, and franchise agreements. Internally generated brands, mastheads and customer lists are excluded from recognition under IAS 38 even though they carry real commercial value.
What are the types of intangible assets?
Purchase price allocation under IFRS 3 and ASC 805 groups intangible assets into five classes: marketing-related, customer-related, artistic-related, contract-based and technology-based. Accounting adds a second split — finite-life assets, which are amortised over their useful life, and indefinite-life assets, which are tested annually for impairment instead.
What is the difference between tangible and intangible assets?
Tangible assets have physical substance: property, plant, equipment and inventory. Intangible assets do not — their value sits in legal rights, relationships, data and know-how. Both can appear on the balance sheet, but most intangible value is internally generated and, apart from qualifying development costs, is expensed as incurred under IAS 38.
More definitions in the intangible asset glossary entry and the full business and finance glossary.
Value your intangible assets with confidence
The Intangible Asset Valuator applies RFR, MPEEM, and Cost approaches to your specific assets, with IFRS 3 and IAS 38 compliance built in.