Data Driven Decisions

Chapter 1When Intangibles Matter Most: Defining Intangible Assets

In order for us to understand when intangibles matter, we need to define what intangibles and intangible assets are, specifically within the context of corporate expansion and valuation.

Broadly defined, intangible assets are assets that you cannot touch and feel. This includes but is not limited to intellectual property, copyrights, trademarks, software code, movies, written works, and visual arts. Intangibles that cannot be touched are elusive and difficult to define – simply given the lack of their physical properties and characteristics.

Within the context of intangible assets specifically, we can break these down into two major categories – identifiable intangible assets and unidentified intangible assets. This categorization is derived from accounting standards, generally accepted accounting principles (GAAP), and International Financial Reporting Standards (IFRS) methodologies that are largely used in financial reporting accounting and large publicly traded companies.

Identifiable intangibles are those intangible assets that cannot be touched or directly seen with the naked eye. But one can point to and meet a separate set of criteria – namely, they must be separable, measurable, and identifiable. We will come back to these sub‐criteria in due course.

The second category of intangible assets is unidentifiable, which are commonly referred to as a “plug.”

In the world of accounting, sometimes you know there ...