INTANGIBLE ASSETS - 8615

(Revised: 10/2020)

An intangible asset is an asset that possesses all of the following characteristics:

 

1. Lacks physical substance. It may be contained in or on an item with physical substance (e.g., software stored on a compact disc), or it may be closely associated with another item that has physical substance (e.g., the underlying land in the case of right-of-way easements).

    

2. Is nonfinancial in nature. Not in a monetary form similar to cash and investment securities. It does not represent a claim or right to assets in a monetary form similar to receivables. Is not a prepayment for goods and services.

    

3. Is identifiable. An intangible asset is considered identifiable when either of the following conditions is met:

 

• The asset is separable. The asset is capable of being separated or divided from the agency/department and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, asset, or liability.
• The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the agency/department or from other rights and obligations.

Intangible assets are recorded at cost. Typical intangible asset costs include the purchase price, development costs associated with internally generated intangible assets (see SAM section 8615.3), legal fees, and other costs incurred to obtain title to the asset. Capitalize intangible assets that meet the capitalization threshold in SAM section 8602 and do not have an inexhaustible useful life.

Three types of intangible assets are excluded from policy:

 

1. Intangible assets acquired or created primarily for obtaining income or profit. These assets should be recorded as an investment.
2. Assets resulting from capital lease transactions reported by lessees.
3. Goodwill created through the combination of another entity and a state department.

 

Other Intangible assets are recorded in the following accounts:

•     Patents, Copyrights, and Trademarks in Account 1620600 (Legacy Account 2413) or 1625600 (Legacy Account 2423)

•     Other Intangible Assets in Account 1620900 (Legacy Account 2414) or Account 1625900

(Legacy Account 2424)