What is the main criterion for identifying a separable intangible asset?

The main criterion for identifying a separable intangible asset is separability and contractual-legal criteria. This concept focuses on the ability to distinguish the intangible asset from other assets and to assess its potential for independent existence and value generation.

Separability refers to the characteristic of an intangible asset that allows it to be sold, transferred, licensed, or exchanged independently of the business as a whole. This means that if the asset can be separated from the company and has an identifiable value on its own, it qualifies as a separable intangible asset.

Contractual-legal criteria also play a significant role, as these assets are often governed by legal rights or contractual agreements that delineate their ownership and the terms associated with their use. For example, patents, trademarks, and copyrights can often stand alone from the business and be dealt with independently due to defined legal protections.

While factors like profitability, market demand, and historical performance can influence the value of an intangible asset, they do not by themselves determine whether the asset is separable. The core focus is on the asset's ability to be identified and sold separately from the business entity, backed by enforceable legal rights.