Consider the investments in the following assets:
- 1.Brand recognition
- 2.Inventory
- 3.Intellectual property
- 4.Mailing list of clients
How many of the above are considered intangible investments?
Answer & explanation
Answer: (c) Only three
An intangible asset has no physical substance: brands, patents and copyrights, software, and customer or mailing lists. Inventory (raw materials, work in progress and finished goods) is physical stock, so it is a tangible asset. Three of the four are intangible.
- ✓ 1. Spending on building a brand creates value that has no physical form; accounting standards treat brands and trademarks as intangible items.
- ✗ 2. Inventory consists of physical goods held for production or sale, a tangible (current) asset.
- ✓ 3. Intellectual property such as patents, copyrights and trademarks is the classic example of an intangible asset.
- ✓ 4. A mailing list of clients is a customer list, which accounting standards list alongside brands and publishing titles as an intangible item.
Remember · Intangible = no physical substance: brands, IP (patents, copyrights, trademarks), software, customer lists, goodwill. Inventory, machinery and buildings are tangible.
Sources
- IFRS Foundation, IAS 38 Intangible Assets ↗ · reference work “An intangible asset is an identifiable non-monetary asset without physical substance. … For this reason, internally generated brands, mastheads, publishing titles, customer lists and similar items are not recognised as intangible assets.”
Question and answer: UPSC's official GS Paper I (2023, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·