What is Intangible Assets?
Intangible assets are identifiable, non-monetary assets without physical substance that an entity controls and from which it expects future economic benefits, including patents, trademarks, copyrights, software, and licenses, accounted for under IAS 38.
How It Works
- Recognition criteria: identifiability, control, future economic benefits, reliable cost measurement.
- Acquired separately: recognized at cost.
- Acquired in a business combination: recognized at fair value.
- Finite life: amortized; indefinite life: tested annually for impairment.
Saudi Context
Saudi listed companies disclose intangible assets prominently in their balance sheets, with the largest balances tied to acquired customer relationships, telecom licenses (CITC-issued, held by stc/Mobily/Zain KSA), bank software platforms, and oil and gas exploration rights. ZATCA accepts amortization of intangibles as a deductible expense in line with IFRS treatment.
Example
A Saudi telecom recognizes a 25-year spectrum license at SAR 5,000,000,000 cost. Classified as a finite-life intangible. Annual amortization = 5,000,000,000 / 25 = SAR 200,000,000.