Identifiable intangible assets

Learning objectives

• Identify, in a case, the intangible assets of the acquiree that are identifiable (contractual or legal rights, separability) and must be recognised separately from goodwill.L2, L3
• Justify why contractual customer relationships are recognised separately from goodwill, whereas non-contractual relationships are recognised separately only if they are separable.L2, L3

Normative references

• IFRS 3Identifiable (Appendix A): an asset is identifiable if it is separable, that is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so, or if it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable.
• IFRS 3 §B32Contractual-legal criterion: an intangible asset that meets it is identifiable even if it is not transferable or separable from the acquiree or from other rights and obligations; examples in the Standard: a licence to operate a nuclear power plant (which may be combined with the power plant if their useful lives are similar) and a patented technology licensed together with the licence agreement.
• IFRS 3 §B33Separability criterion: the intangible asset can be separated and sold, transferred, licensed, rented or exchanged, either individually or together with a related item, even if the acquirer does not intend to do so; exchange transactions for that type of asset or a similar asset, even if infrequent, provide evidence of this (for example customer lists, which are frequently licensed), unless confidentiality terms prohibit the sale of that information.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Under the contractual-legal criterion, which of these intangible assets of the acquiree is identifiable?L2
• Vega Santé SA acquires an engineering firm. Among its intangible assets are framework contracts signed with twelve customers, not transferable without the customers' agreement; and a list of prospect contacts with no contractual commitment, which the firm has never sold but for which exchange transactions exist in the sector. Write a short note concluding on the identification of each, distinguishing facts of the case, rule and professional judgement.L3