A customer list, patent, license, formula, brand, or noncompetition agreement may matter economically without following the same accounting route. Begin with the transaction and the rights: can the item be separated, or does it arise from contractual or legal rights under the applicable model?
In a stipulated business combination, a contractual customer relationship and a patented process can be identifiable even if the buyer intends to use them together. Goodwill is considered only after supported identifiable assets and liabilities have been recognized and measured. Outside a combination, the source and recognition model can produce a different result for internally generated spending.
Identifiability does not supply control, probable benefit, acquisition-date fair value, useful life, or impairment evidence. It is the identity gate that keeps a residual acquisition amount from swallowing assets that require their own accounting.
Apply the distinction
A separately recognized customer relationship can arise from a contract even when management will combine it with other operations. The identity test comes before valuation and prevents a measurable right from disappearing into goodwill.
Authority
Read ASC 805-20-25-30 for the separability and contractual-legal criteria.
Read ASC 350-30-25-3 for the boundary on internally developed intangible costs.
Put the concept to work
Understand this concept
- State the two conditions that make an intangible asset identifiable, and name examples that meet each one.
Apply this concept
- Use supplied separability and contractual-right facts to distinguish an identifiable intangible asset from goodwill, expense, or an unresolved item before measurement.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Asset — Apply
To apply this concept: Required. The learner must distinguish a controlled accounting resource from a valuable idea or activity.
- Asset — Understand
To understand this concept: Required. An identifiable intangible is first an asset.
Lessons
Worked examples and cases
Practice
Common mistaken ideas
Sources
Standard references
Broader topics
More specific topics
- Acquired in-process research and development
- Business-combination intangible asset
- Finite-lived intangible asset
Show 1 more more specific topics
Related concepts
Use this idea next
- Business-combination intangible asset — Analyze
Required level here: apply. Required. The acquisition schedule depends on separate identification before residual measurement.
- Finite-lived intangible asset — Analyze
Required level here: apply. Required. Useful-life analysis follows recognition and asset identity.
- Finite-lived intangible asset — Understand
Required level here: understand. Required. The classification applies to an identifiable intangible.
Show 3 more next steps
- Indefinite-lived intangible asset — Analyze
Required level here: apply. Required. The life conclusion applies to a recognized and identified asset.
- Indefinite-lived intangible asset — Understand
Required level here: understand. Required. The classification applies to an identifiable intangible.
- Subsequent expenditure on an intangible asset — Understand
Required level here: apply. Required. The question is what happens after such an asset is on the books.