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Identifiable Asset

What is an 'Identifiable Asset'

An identifiable asset is an asset of an acquired company that can be assigned a fair value and can be reasonably expected to provide a benefit for the purchasing company in the future. Identifiable assets can be both tangible and intangible assets.

Explaining 'Identifiable Asset'

If an asset is deemed to be identifiable, the purchasing company records it as part of its assets on its balance sheet. If an asset is not deemed to be an identifiable asset, then its value is considered part of the goodwill amount arising from the acquisition transaction.

For example, suppose ABC conglomerate company purchases both a smaller manufacturing firm and a smaller start-up internet marketing company. The manufacturing company would likely have most of its value tied up in property, equipment, inventory and other physical assets, so virtually all of its assets would be identifiable. The internet marketing company, on the other hand, would likely have very few identifiable assets, and its value as a company would be based on its future earnings potential. As such, the purchase of the marketing company would generate a lot more goodwill on ABC's books, because it would gain few identifiable assets from the marketing company.


Further Reading


Adoption of international financial reporting standards: impact on the value relevance of intangible assets
onlinelibrary.wiley.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

The value relevance and reliability of reported goodwill and identifiable intangible assetsThe value relevance and reliability of reported goodwill and identifiable intangible assets
www.sciencedirect.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

Intangible assets and capital structureIntangible assets and capital structure
www.sciencedirect.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

Identifiable intangible asset disclosures, stock prices and future earningsIdentifiable intangible asset disclosures, stock prices and future earnings
onlinelibrary.wiley.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

Towards a financial reporting framework for intangiblesTowards a financial reporting framework for intangibles
www.emerald.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

The relevance to firm valuation of capitalising intangible assets in total and by categoryThe relevance to firm valuation of capitalising intangible assets in total and by category
onlinelibrary.wiley.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

Accounting for intangible assets: current requirements, key players and future directionsAccounting for intangible assets: current requirements, key players and future directions
www.tandfonline.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …

Intangible assets and value relevance: Evidence from the Portuguese stock exchangeIntangible assets and value relevance: Evidence from the Portuguese stock exchange
www.sciencedirect.com [PDF]
… The changes to accounting for goodwill and identifiable intangible assets identified above … Evidence indicates that managers' voluntary intangible asset recognition choices are based on their insights into the firm's underlying economic circumstances (Wyatt 2005) and …



Q&A About Identifiable Asset


What is an identifiable asset?

An identifiable asset is an asset of an acquired company that can be assigned a fair value and can be reasonably expected to provide a benefit for the purchasing company in the future.

Are all assets considered identifiable?

No, not all assets are considered identifiable.

How do you determine if an asset is identified or not?

If it can be assigned a fair value and provides a benefit for the purchasing company in the future, then it's identified.

Can intangible assets also be identified?

Yes, intangible assets can also be identified.

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