Code No. 803.8
INTANGIBLE ASSETS POLICY
An intangible asset should be recognized in the statement of net assets only if it is identifiable which means the
asset is either:
a) separable (i.e. it can be separated/divided from the government and sold, transferred, licensed, rented or
b) arose from contractual or other legal rights, regardless of whether those rights are transferable or
GASB Statement 51 defines intangible assets as assets that are identifiable and possess all of the following
lack of physical substance,
nonfinancial nature (not in monetary form like cash or investment securities) and
initial useful life extending beyond a single reporting period.
Examples of intangible assets include easements, land use rights (i.e. water rights, timber rights and mineral
rights), patents, trademarks and copyrights. In addition, intangible assets include computer software that is
purchased, licensed or internally generated (including websites) as well as outlays associated with an
internally generated modification of computer software.
Intangible assets can be purchased or licensed, acquired through nonexchange transactions or internally
All intangible assets subject to the provisions of GASB Statement 51 should be classified as capital assets.
Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets
(i.e. recognition, measurement, presentation, disclosure, etc.) should be applied to intangible assets as
GASB Statement 51 applies to all intangible assets except: (a) assets acquired or created primarily for purposes
of directly obtaining income or profit (these intangible assets should be considered investments), (b) assets from
capital lease transactions reported by lessees, except licensing agreements to lease commercially available
computer software, and (c) goodwill created through the combination of a government and another entity.
Threshold for Capitalization
All intangible assets at or above $150,000 must be reported for the audit and Certified Annual Report (CAR), all
other intangible assets are excluded. The threshold is to be consistently applied by all departments and offices of
the District for financial reporting purposes.
This policy must be applied to all intangible assets. If an intangible asset that meets the threshold criteria is
fully amortized, the asset must be reported at the historical cost and the applicable accumulated amortization
must also be reported. It is not appropriate to “net” the intangible asset and amortization to avoid reporting.
When intangible assets are sold or disposed of, it is necessary to calculate and report a gain or loss in the
statement of activities. The gain/loss is calculated by subtracting the net book value (historical cost less any
accumulated amortization) from the net amount realized on the sale or disposal.
Code No. 803.8