What are intangible assets?

Published Wednesday 30 September 2026

Table of contents

• What are intangible assets?
• Types of intangible assets
• Examples of intangible assets
• Intangible assets vs tangible assets
• How intangible assets are recognised in Indonesia
• How intangible assets appear on the balance sheet
• Amortising intangible assets
• How intangible assets are valued
• How to protect intangible assets in Indonesia
• Keep track of your assets with Xero
• FAQs on intangible assets
• Related terms
• Learn more about intangible assets

Key takeaways

• Intangible assets have value but no physical form, such as patents or goodwill you’ve bought
• PSAK 238 is Indonesia’s intangible assets standard for publicly accountable businesses, while most private businesses use SAK EP or SAK EMKM
• Accounting rules for amortising goodwill depend on your standard, while tax rules spread intangible costs over 4, 8, 16 or 20 years
• Registering your intellectual property with the Directorate General of Intellectual Property (DJKI) gives you legal proof of ownership

What are intangible assets?

Intangible assets are things your business owns that have value but no physical form, such as a brand name or a patent. Under International Accounting Standard 38 (IAS 38), an intangible asset is identifiable, non-monetary and has no physical substance.

Indonesia’s equivalent is Pernyataan Standar Akuntansi Keuangan (PSAK) 238 Aset Takberwujud, renumbered from PSAK 19 on 1 January 2024. Like your other assets, intangible ones help you earn income, often for several years.

Picture a local coffee shop. The espresso machine and tables are tangible, while the shop’s registered name and the franchise licence it pays for are intangible.

Types of intangible assets

Intangible assets fall into two groups, depending on whether you can separate them from the business. That split affects how you record and value each one.

Identifiable intangible assets

An identifiable asset is one you can sell or license on its own, or one that comes from a contract or legal right. Common examples include:

• copyrights
• trademarks and trade names
• patents
• licences
• other intellectual property, such as industrial designs and trade secrets

Unidentifiable intangible assets

Goodwill is the main unidentifiable type, because it’s tied to the business as a whole. It’s the extra amount a buyer pays above the value of a business’s identifiable net assets, reflecting its reputation and loyal customers.

Examples of intangible assets

Your business probably holds several of these assets, even if they never appear in your accounts. Here’s what the common ones look like in practice:

• Goodwill is the premium a buyer pays for a business’s reputation and customer base
• Patents give you the exclusive right to make and sell an invention
• Trademarks protect the names and logos that identify your products
• Copyrights cover original work, such as website content or product photos
• Licences and software give you the right to use programs or franchises you pay for
• Brand recognition is how quickly customers spot and trust your business
• Customer lists are records of past buyers you can sell to again

Intangible assets vs tangible assets

The key difference is physical form: you can touch tangible assets, while intangible assets exist as rights or reputation. Here’s how the two compare:

• Tangible assets have a physical form, such as vehicles or machinery
• Intangible assets get their value from legal rights or reputation
• Tangible assets lose value over time through depreciation
• Intangible assets with a finite life lose value through amortisation

Either type can be a long-term asset, and how long you’ll use it decides its classification. Learn how that time frame shapes your books with this guide to current assets vs fixed assets.

How intangible assets are recognised in Indonesia

An intangible asset goes on your books once it passes a set of tests. Which rulebook you follow depends on your business’s size and public accountability.

Recognition criteria

Under IAS 38, you can recognise an intangible asset when it meets all four of these tests:

• it’s identifiable, meaning it’s separable or comes from a contract or legal right
• your business controls it
• it’s likely to bring future economic benefits
• you can measure its cost reliably

Buying an asset usually makes these tests easy to meet, because the invoice shows exactly what it cost. Building one yourself is harder to measure, which is why many home-grown intangibles stay off the books.

Which Indonesian accounting standard applies

Indonesia has three tiers of Standar Akuntansi Keuangan (SAK), or financial accounting standards. Depending on your business, you’ll follow:

• full PSAK, including PSAK 238, if your business has significant public accountability
• SAK Entitas Privat (SAK EP), which replaced SAK ETAP on 1 January 2025, if you run a private entity without significant public accountability
• SAK EMKM, a simplified standard for micro, small and medium enterprises (MSMEs) that records intangibles at cost and amortises them straight-line

Your accountant can confirm which tier fits, since it shapes how these assets appear in your financial statements.

How intangible assets appear on the balance sheet

Intangible assets sit on your balance sheet as non-current assets, because you expect to use them for more than a year. Along with your other assets and liabilities, they help show your owner’s equity.

Many valuable intangibles never reach the balance sheet. IAS 38 keeps goodwill, brands and customer lists that you build yourself off your books.

Take two bakeries. The first has built a loyal following over 10 years, yet its balance sheet shows none of that value. The second bought a rival and records the goodwill it paid for.

Amortising intangible assets

Amortisation spreads an asset’s cost over the years it earns income for you, much like depreciation does for equipment. Your accounts and your tax return follow separate rules, so it helps to understand both.

Amortisation in your accounts

For accounting, the treatment depends on the asset’s useful life. IAS 38 sets out two paths:

• a finite life, such as a five-year software licence, means you amortise the cost and test the asset for impairment
• an indefinite life means no amortisation, with an impairment test every year instead

Under full PSAK, purchased goodwill isn’t amortised and is tested for impairment each year instead. Under SAK EP, which is based on the IFRS for SMEs Accounting Standard, goodwill is amortised over its useful life. An impairment test checks whether an asset is still worth its value in your books, and any shortfall is written off as an expense.

How tax amortisation works in Indonesia

For tax, harta tak berwujud (intangible assets) follows its own amortisation periods, so your tax figures can differ from your accounts. Under Income Tax Law Pasal 11A and Minister of Finance Regulation (PMK) 72/2023, intangibles have useful lives of 4, 8, 16 or 20 years.

If an asset lasts longer than 20 years, you amortise it over the group 4 period or its actual useful life in your books. Your tax adviser can confirm which of the four groups each asset belongs in.

Goodwill you’ve paid for is amortisable for tax, even if your accounts only test it for impairment under full PSAK. That’s why your tax figures and book figures for goodwill can differ.

How intangible assets are valued

Putting a value on these assets helps when you sell your business or bring in an investor. There are three main valuation approaches:

• The market approach compares your asset with recent sales of similar assets
• The income approach estimates the future income or cost savings the asset will bring, in today’s money
• The cost approach works out what it would cost to rebuild or replace a similar asset

A valuation can also show how much of your business’s net worth comes from assets outside the balance sheet, such as a well-known brand.

How to protect intangible assets in Indonesia

Registering your intellectual property (IP) gives you legal proof of ownership, which supports its value. Follow these steps to secure the assets your business depends on:

1. Register trademarks with the Directorate General of Intellectual Property (DJKI). Protection lasts 10 years from filing, renewable for further 10-year terms.
2. File patents for new inventions. A patent lasts 20 years from filing and a simple patent lasts 10 years, with both terms fixed.
3. Record copyright in your original work. For most individual works, rights last for the creator’s life plus 70 years, and other categories differ.
4. Use contracts to guard know-how you keep private. Non-disclosure agreements (NDAs) cover confidential information, and licence agreements set how others may use your IP.

Keep track of your assets with Xero

Your brand and goodwill can make up a large share of what your business is worth, so accurate records help you plan and sell with confidence.

With fixed asset management in Xero, you can keep a register of what your business owns and work with your accountant in real time. Try Xero today and get one month free.

FAQs on intangible assets

Here are quick answers to common questions about intangible assets.

Are intangible assets current assets?

They’re non-current assets, because they bring value for more than a year. Current assets, such as stock and money customers owe you, usually turn into cash within 12 months.

Are intangible assets fixed assets?

The term fixed assets usually refers to tangible items such as equipment, so these get their own line under non-current assets. You can still track both in one asset register.

Is intellectual property an intangible asset?

Yes, intellectual property is one of the most common types. Registering it with DJKI gives you a legal record of ownership, which makes it easier to sell or license.

What’s the difference between amortisation and depreciation?

Both spread an asset’s cost over its useful life: amortisation covers intangible assets and depreciation covers tangible ones. Each shows up as an expense in your profit and loss report without any cash leaving your bank account.

How do you value intangible assets?

The income approach suits assets with clear earnings, such as a licensed patent, while the cost approach suits software you built in-house. For a sale or dispute, a qualified valuer can confirm the figure.

What are 5 examples of intangible assets?

Five common examples are goodwill, patents, trademarks, copyrights and software licences. For a small café, that could mean its registered name and logo, a franchise licence and goodwill paid when buying the business.

Is goodwill amortised?

It depends on the rules you follow: full PSAK tests goodwill for impairment instead of amortising it, while SAK EP amortises it. For Indonesian tax, you can amortise goodwill you’ve bought, so your tax and book figures may differ.

Related terms

• Fixed assets
• Current assets
• Liabilities
• Accounting equation

Learn more about intangible assets

• Is accumulated depreciation an asset?
• Liquidity ratios
• Accounting glossary