CIRD11135 - Intangible assets within CTA09/PART8: asset conditions: importance of distinction between goodwill and intangible asset

Borderline between goodwill and intangible assets

»Ê¹ÚÌåÓýapp dividing line between ‘goodwillâ€� and particular intangible assets or intellectual property, as defined for accounting purposes, may often be difficult to establish. On analysis for example the value of the goodwill of a business may arguably reside in particular assets such as customer lists or various forms of know-how.

For accounting purposes, however, little turns on whether assets close to the borderline fall on one side or the other. »Ê¹ÚÌåÓýapp provisions of FRS 105 and FRS 10 are likely to apply to such assets in the same way whether they are classified as goodwill or as a separate intangible asset. »Ê¹ÚÌåÓýappre are however differences in the treatment under IAS38 and FRS 102. See CIRD30530.

»Ê¹ÚÌåÓýapp distinction is however important when applying the rules in CTA09/PART 8. As examples:

  • there are different rules to determine the time of creation of goodwill and other intangible assets (see CIRD11675); and
  • FA15, F2A15 and FA19 introduced new rules that restrict when and how goodwill and certain customer related intangible assets are relieved under CTA09/PART 8 (see CIRD44000 onwards).