Intangible assets
Learn what intangible assets are, how FRS 102 treats them and how Irish companies can claim tax relief.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Intangible assets are non-physical assets with value, such as intellectual property (IP) and goodwill
- They split into identifiable assets like patents and trademarks, and unidentifiable assets like goodwill
- Under Financial Reporting Standard 102 (FRS 102), all intangibles, including goodwill, are amortised over a finite useful life
- Irish companies can claim capital allowances on specified intangible assets, within ring-fencing rules and an 80% cap
What are intangible assets?
An intangible asset is an identifiable, non-monetary asset with no physical form, which is how the IAS 38 standard defines it. Like your other business assets, it’s something you control that should bring you economic benefits in future.
For a small business, these assets can make up a large share of what the company is worth. Say you run a craft brewery in Kilkenny. Your registered brand and loyal stockists can help you raise finance or sell the business for more than your brewing kit alone would fetch.
Types of intangible assets
These assets fall into two groups. The split depends on whether you can separate the asset from the business.
Identifiable intangible assets
An identifiable intangible asset is separable, so you can sell, license or transfer it on its own, or it comes from contractual or legal rights. Common identifiable intangibles include the following.
- Copyrights
- Trademarks and trade names
- Patents
- Licences
- Other IP, such as registered designs
Unidentifiable intangible assets
Unidentifiable assets can’t be separated from the business and sold on their own. Goodwill is the main example. It’s the extra amount a buyer pays above the value of the identifiable net assets, reflecting your reputation and customer relationships.
Examples of intangible assets
Most small businesses own more of these assets than they realise. Here are common examples you might find in yours.
- Goodwill from buying another business
- Patents on an invention or process
- Trademarks and trade names
- Copyrights on written work, images or code
- Licences, such as a franchise agreement
- Software you’ve bought or developed
- Know-how, such as recipes or production methods
- Customer lists bought from another business
- Domain names
Picture a Galway bakery that registers its name as a trademark and keeps its sourdough recipes confidential. Both give the bakery an edge over competitors, even though you can’t touch either one. Whether they show up in the accounts depends on how the bakery got them, as the recognition section below explains.
Intangible assets vs tangible assets
Tangible assets have a physical form, such as vans and equipment. Long-term tangible assets lose value over time through depreciation.
The two types differ in a few practical ways.
- Tangible assets have a physical form, while intangibles have none
- Tangible assets are depreciated, while intangibles with a finite life are amortised
- Intangibles are usually harder to value, as there’s often no obvious market price
- Intangibles are often less liquid, so they can take longer to sell or turn into cash
Intangibles are long-term by nature, so it helps to understand the split between current vs fixed assets too.
How intangible assets are recognised
Whether a non-physical asset appears in your accounts depends on how you got it. Under FRS 102, bought assets and assets you build yourself follow different rules.
Here’s how FRS 102 treats the main situations.
- Bought intangibles, such as a purchased trademark, are recognised at cost
- Research costs are always expensed in the profit and loss account, and the Companies Act 2014 rules bar treating them as assets
- Development costs can be capitalised once they meet set criteria, if you choose this as your accounting policy
- Brands, customer lists and goodwill you build yourself stay off the balance sheet
When you recognise a bought intangible, double-entry bookkeeping records it as an asset on one side and a payment or liability on the other.
How intangible assets appear on the balance sheet
Recognised intangibles are recorded as non-current assets, because you expect to use them for more than one year. They’re shown at cost, less amortisation to date and any impairment.
Because assets minus liabilities equals owner’s equity, a recorded intangible adds to the net worth shown on your balance sheet. A business with a strong reputation it built itself can be worth more than that figure suggests.
Amortising intangible assets
Amortisation spreads the cost of an intangible over its useful life, much like depreciation does for equipment. Each year, part of the cost moves from the balance sheet to the profit and loss account.
Most Irish small companies prepare accounts under FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland. Under it, every intangible asset, including goodwill, has a finite useful life and is amortised. If you can’t reliably estimate that life, it can’t be longer than 10 years. The Institute of Chartered Accountants in England and Wales (ICAEW) sets this out in its FRS 102 helpsheet.
Companies reporting under International Financial Reporting Standards (IFRS) follow International Accounting Standard 38 (IAS 38) instead. It lets some intangibles have an indefinite life, with an annual impairment test in place of amortisation, as PKF’s guide to IAS 38 explains.
Tax relief for intangible assets in Ireland
Irish companies can claim capital allowances on capital spending on specified intangible assets, such as patents, copyrights, trademarks and know-how. The assets count as plant and machinery for capital allowance purposes, according to Revenue.
You can work out the claim in one of two ways.
- Claim the amortisation and impairment charged in your profit and loss account
- Elect for a fixed 15-year write-down at 7% a year, with 2% in the final year
The relief is ring-fenced, so you can only offset it against income from relevant activities that use those assets. For spending on or after 11 October 2017, the deduction can’t exceed 80% of the trading income from the relevant trade for that period.
Finance Act 2025 extended the ring-fencing and the 80% cap to balancing allowances, for balancing events on or after 8 October 2025, as Revenue’s capital allowances guidance sets out. The rules are detailed, so talk to your accountant or advisor before you make a claim.
How intangible assets are valued
Putting a figure on brand value or know-how is harder than valuing equipment, because there’s often no obvious market price. Valuers usually work from one of three standard approaches.
- Compare the asset with similar ones that have sold recently (the market approach)
- Estimate the income the asset should bring in over its life (the income approach)
- Work out what it would cost to recreate or replace the asset (the cost approach)
If you’re planning to sell or value your business, an independent expert can help you choose the right approach for each asset.
Keep track of your assets with Xero
Brands and goodwill can hold much of your business’s value, and accurate records make reporting and tax time easier. They also give you a clearer picture when you’re making big decisions.
Xero brings your finances together in one place, so you can manage fixed assets and check your reports in real time. Sign up 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?
No, they’re non-current assets because you use them for more than one year. Current assets, like cash and stock, are expected to turn into cash within 12 months.
Are intangible assets fixed assets?
In everyday use, “fixed assets” usually means physical items like equipment. In Irish company accounts, though, the balance sheet formats in Schedule 3 of the Companies Act 2014 list intangible assets under fixed assets, next to tangible fixed assets.
Is intellectual property an intangible asset?
Yes, IP such as patents and copyrights is an identifiable intangible asset. Patents and trademarks can be registered with the Intellectual Property Office of Ireland.
Is goodwill amortised under FRS 102?
Yes, goodwill is amortised like other intangibles. If you can’t reliably work out how you’ll use up its benefits, you amortise it on a straight-line basis, charging the same amount each year.
Can you claim tax relief on intangible assets in Ireland?
Yes, companies can claim capital allowances under the specified intangible assets scheme in section 291A of the Taxes Consolidation Act 1997, covered in Revenue’s tax and duty manual. Your accountant can confirm which assets qualify and which claim method suits you.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.