What are intangible assets?

An intangible asset is an identifiable non-monetary asset without physical substance, such as a patent or a software licence. Singapore companies account for them under FRS 38 or SFRS(I) 1-38, the local Financial Reporting Standards that mirror International Accounting Standard (IAS) 38, as the Institute of Singapore Chartered Accountants (ISCA) notes.

Like any of your business assets, intangibles have value because they help you earn income. For a small business, they can make up a big share of what the company is worth.

Picture a bakery in Tiong Bahru. Its ovens are physical assets, but its well-known name and signature recipes are intangible, and they’re often what brings customers back.

Types of intangible assets

Intangible assets fall into two groups, depending on whether you can separate them from the business. The split matters because it decides how each asset is recorded and valued.

Identifiable intangible assets

Identifiable intangibles can be separated from your business and sold or licensed, or they come from legal or contractual rights. Common examples include:

copyrights
trade marks and trade names
patents
licences and franchise agreements
trade secrets, such as recipes or formulas
customer lists

Unidentifiable intangible assets

Unidentifiable intangibles can’t be pulled apart from the business as a whole. Goodwill is the main one: it captures your reputation and customer relationships, and it only shows up in the accounts when you buy another business.

Examples of intangible assets

Most small businesses own more intangible assets than they realise. Here are seven you’re likely to come across:

Goodwill: the premium a buyer pays for a business’s reputation and customer base
Patents: exclusive rights to make and sell an invention
Trade marks and trade names: the names and logos that tell customers who you are
Copyrights: rights over original work, such as written content, designs, music or code
Licences: permission to use someone else’s property, technology or brand
Software: programs you buy or develop, including accounting and point-of-sale systems
Customer lists: records of buyers and their contact details, often valuable when a business is sold

Intangible assets vs tangible assets

The main difference is physical form: tangible assets, such as vans and computers, are things you can touch. A few other differences follow from that.

Tangible assets lose value through depreciation over time, while intangibles with a finite life are amortised
Intangibles are harder to value because there’s rarely a market price to check
Intangibles are usually less liquid, so turning them into cash can take longer
Both can be long-term assets, which is why the current vs fixed split matters for your accounts

Intangible assets vs goodwill

Goodwill is an intangible asset that only arises when you buy another business. It’s the premium you pay above the fair value of the business’s identifiable net assets.

Say you pay S$400,000 for a business whose identifiable assets, less its debts, are worth S$300,000. The extra S$100,000 is goodwill, and working out a fair price is a key part of any effort to value a company.

Goodwill differs from other intangibles in a few ways:

you can’t sell it separately from the business
it isn’t amortised
it’s tested for impairment at least once a year under the impairment standard IAS 36
goodwill you build yourself isn’t recognised on the balance sheet

How businesses acquire intangible assets

You can build intangible assets yourself or buy them from someone else. How you get them changes whether they appear in your accounts.

Imagine you run a café in Singapore and buy a popular local recipe brand for S$80,000. You paid a clear price, so the brand goes on your books as an intangible asset.

Now say your team develops a new app for loyalty rewards. Research costs, such as testing ideas, are expensed as you go. Development costs can be capitalised once the project meets set criteria, such as being technically feasible and likely to bring future benefits, under IAS 38 rules.

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. They’re usually measured at cost less accumulated amortisation and any impairment losses.

Brands, customer lists and similar items you build internally aren’t recognised as assets, according to the IFRS Foundation. So the reputation you’ve spent years earning adds value to your business without showing up in the accounts.

Amortising intangible assets

Amortising an intangible asset spreads its cost over the years you expect to use it. How you treat each asset depends on its useful life.

Finite life: amortise the cost over the asset’s expected useful life, such as a licence with a fixed term
Indefinite life: skip amortisation and test for impairment each year instead, as with acquired goodwill

Most small businesses use the straight-line method, which charges the same amount each year. To work it out:

Start with the cost of the asset.
Subtract its residual value, which is often zero for intangibles.
Divide the result by its useful life in years.

For example, a S$50,000 software licence with no residual value and a 10-year life gives amortisation of S$5,000 a year.

How intangible assets are taxed in Singapore

In Singapore, the amortisation in your accounts isn’t deductible for tax. Instead, you may be able to claim capital allowances on qualifying intellectual property (IP) you acquire.

Acquired IP rights may qualify for writing-down allowances under Section 19B of the Income Tax Act, says the Inland Revenue Authority of Singapore (IRAS). You claim over five years by default, or over 10 or 15 years by an election you can’t reverse, according to PwC Worldwide Tax Summaries.

The same PwC summary notes that payments for goodwill are generally treated as capital and aren’t deductible. Tax rules on IP can be detailed, so check with a tax adviser before you buy or claim.

How intangible assets are valued

Intangible assets rarely have an obvious market price, so valuers use one or more set approaches. The right one depends on the asset and why you need the figure:

Market approach: compares the asset with similar ones, for example through comparable sales
Income approach: estimates the income the asset will earn, for example with the relief-from-royalty method
Cost approach: works out what it would cost to recreate the asset, for example its replacement cost

Singapore is also working to make these valuations more consistent. The Ministry of Law has announced Intangible Asset Valuation Guidelines, developed by the Institute of Valuers and Appraisers Singapore (IVAS). The Accounting and Corporate Regulatory Authority (ACRA) and the Intellectual Property Office of Singapore (IPOS) supported the work.

If you’re planning to sell or raise funds, these methods feed into how you value a business.

Why intangible assets matter for your business

Intangible assets can add real weight to your business’s net worth, and businesses worldwide are putting more money into them. According to Singapore’s Ministry of Law, citing World Intellectual Property Organization (WIPO) data, global investment in intangibles passed US$10 trillion in 2025.

That same WIPO data shows intangible investment growing faster than spending on physical assets. Protecting what you own helps you keep that value.

A registered trade mark is protected for 10 years from the filing date and can be renewed, according to IPOS trade mark guidance
A patent can last up to 20 years from the filing date if you pay annual renewal fees, according to IPOS patent guidance
A strong brand and loyal customer relationships can help you raise finance or sell the business at a better price

Keep track of your intangible assets with Xero

Your brand and software can be worth as much as your equipment, so it pays to keep clear records of what you own. Accurate figures make tax time and big decisions simpler.

Xero brings your finances together in one place, so you can track assets and amortisation, then run financial reports in real time. Get set up today and get one month free to see how it works for your business.

FAQs on intangible assets

Here are quick answers to common questions about intangible assets in Singapore.

Are intangible assets current assets?

No, they’re non-current assets because you use them for longer than a year. Current assets, such as cash and stock, turn into cash within 12 months.

Are intangible assets fixed assets?

Not usually, since fixed assets are physical items such as equipment and property. Both are long-term, so they often sit near each other in the non-current section of your balance sheet.

Is software an intangible asset?

Yes, software you buy or develop is generally an intangible asset. Software that’s built into hardware, such as a machine’s operating system, is usually recorded as part of that equipment.

What happens to intangible assets when you buy a business?

Under the business combinations standard, you recognise each identifiable intangible, such as trade marks or customer lists, separately at fair value. Whatever you’ve paid above the value of all identifiable net assets is goodwill.

Can you record your own brand as an intangible asset?

No, a brand you build yourself stays off the balance sheet, even if it’s valuable. You can still register it as a trade mark with IPOS to protect it legally.

Are intangible assets tax deductible in Singapore?

Some are, through writing-down allowances on acquired IP rather than through book amortisation. You’ll need to keep records showing you legally own the IP to support a claim.

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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.

What are intangible assets?

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