Identifiable asset
This is a type of an asset whose market value can be estimated at any given point in time and it is expected to bring measurable benefit to the business in the future.
Identifiable assets play an important role in the process of mergers and acquisitions – the sale and purchase of companies.
Identifiable assets refer to assets listed on the balance sheet of the acquired company. Any asset amount not included on the balance sheet is categorised as “goodwill.” The value of goodwill is determined by the acquiring company’s payment and is primarily influenced by its perception and assumptions. This is why goodwill is not considered to be an identifiable asset.
According to the asset recognition criteria outlined in CON5, an asset is acknowledged when it fulfils the asset definition, possesses a measurable attribute that is sufficiently reliable, and the information pertaining to it is faithfully represented, verifiable, neutral (i.e., reliable), and capable of influencing user decisions (i.e., relevant).
In order for intangible assets to be recognised outside of goodwill, they have to meet two additional parameters:
- Legal (or contractual) – the ability to exercise authority over the prospective economic advantages of the asset arises from contractual or legal entitlements (irrespective of the possibility of transferring or separating these entitlements from other rights and obligations).
Separability – the asset has the potential to be divided or separated and then sold, transferred, licensed, rented, or exchanged (regardless of whether there is a present intention or an existing market for such transactions). Alternatively, if it cannot be sold, etc., on its own, the asset is capable of being sold, transferred, licensed, rented, or exchanged together with a related contract, asset, or liability.
