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Human Resource And Management

The GASB Standards For Intangible Assets

The Governmental Accounting Standards Board is an organization committed to disseminating information about its standards and the activities that revolve around the setting of standards to its constituents. This paper will summarise information on the GASB standards for intangible assets.

Recently, the organization issued its 51st statement of standards for intangible assets. The following are the items listed as intangible assets: easement, the right to use land such as a source of water or for mining, patents, trademarks, and royalties. GASB includes an intangible asset in its statement number 34 to provide guidance for the local and state governments on how to classify and report intangible assets.

Statement 51 was issued solely for the improvement of financial reporting by minimizing disparities that usually arise in the treatment of intangible assets and enhancing the comparability of financial statements among states and local governments. According to the statement, intangible assets have the following characteristics: they lack physical substance, which means that they cannot be touched; it is nonfinancial in nature, and their useful life goes beyond just one accounting period (Summary of Statement No. 51-GASB Home, 2018).

Intangible assets are to be treated as capital assets as stated in the standards by GASB in accordance with the guidelines for the treatment of capital assets. However, some are not supposed to be treated within the scope of capital assets. For example, intangible assets meant to make income or profits are supposed to be considered investments.

There are also specific outlines relating to issues of intangible assets, such as reporting their historical costs in the financial statements, where they have to be identified as inseparable when sold, rented, or transferred to another party. In cases where the intangible assets are inseparable, a contractual obligation or legal rights arises.

Intangible assets can be purchased or received from other parties or, in some cases, generated internally. In a situation where they are generated internally, there are some costs or expenditures incurred in the process. The standard issued specifies three circumstances that are necessary for such intangible assets generated internally to be reported as capital assets.

An intangible asset owned by the government is to be reported as a capital asset upon a government determination of the specific objective and service capacity for which the assets are to be used upon completion. An intangible asset can also be reported as a capital asset if the feasibility of its generated and intention for completion or continued development can be demonstrated. In addition, the standard also provides guidance on how to apply the above circumstances for computer software, which is commonly generated internally (Høegh-Krohn and Knivsflå, 2000).

In situations where intangible assets have no legal agreements or regulations, they are considered to have indefinite useful life. They are not supposed to be amortized if it is determined that they have an indefinite useful life; however, amortization can be done in situations where there are changes in circumstances (Lev, 2003).

In conclusion, following the feedback from the constituents pertaining to the proposed version of the highlighted standards, the GSAB board decided to ease the transition of provision. The board also clarified the definition and characteristics of intangible assets to make them more understandable. The GSAB board also added an exception that requires intangible assets held for making a profit or income to be treated as an investment (Summary of Statement No. 51-GASB Home, 2018).


Lev, B. (2003). Remarks on the measurement, valuation, and reporting of intangible assets.

Høegh-Krohn, N. E. J., & Knivsflå, K. H. (2000). Accounting for Intangible Assets in Scandinavia, the UK, the US, and by the IASC: Challenges and a Solution. The International Journal of Accounting35(2), 243-265.



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