Recognizing Intangible Assets

For financial reporting purposes, “intangible assets” consist of assets (not including financial assets) that lack physical substance.1 Intangible assets are getting more and more important to companies and their owners as the economies of many developed countries have changed from industrial to knowledge-based. The manufacturing/industrial value chain is no longer the primary driver of value creation; it is innovation and constantly seeking new ways of meeting market demands. Companies seek to differentiate themselves through the creation or acquisition of intangible assets to create competitive advantages. With the increased importance of their intangible assets, the need for relevant and