What is Trademark?
A trademark is an intangible asset comprising a distinctive sign, name, logo, or symbol legally registered to identify a business’s products or services, recognized as an intangible asset under IAS 38 when acquired and protected legally for renewable terms.
How It Works
- Purchased trademarks: capitalized at cost.
- Internally generated trademarks: not recognized (expensed as incurred under IAS 38).
- Indefinite useful life: not amortized, tested annually for impairment.
- Finite useful life: amortized over legal protection period.
Saudi Context
Saudi trademarks are registered with the Saudi Authority for Intellectual Property (SAIP), valid for 10 years and indefinitely renewable. Saudi companies acquiring established Saudi brands (e.g., regional FMCG acquisitions) recognize the trademarks at fair value as part of the IFRS 3 purchase price allocation and typically classify them as indefinite-life intangibles.
Example
A Saudi conglomerate acquires a Saudi food brand and allocates SAR 8,000,000 of the purchase price to its trademark. Classified as indefinite-life, no amortization is charged, but an annual impairment test compares carrying amount to recoverable amount.