Can I revalue an intangible asset under FRS 102?

This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members to understand when it may be possible to revalue intangible assets and the criteria for doing so under FRS 102.

This helpsheet includes references to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (September 2024) (‘new FRS 102’) which is effective for accounting periods beginning on or after 1 January 2026 (except for paragraphs 7.20B and 7.20C which are effective for accounting periods beginning on or after 1 January 2025). This helpsheet also includes references to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (January 2022) (‘old FRS 102’) which was effective for accounting periods beginning on or after 1 January 2019, or 1 January 2017 for small entities applying Section 1A, following the Triennial review 2017.

Members may also wish to refer to the following related helpsheet:

• Accounting for intangible assets and goodwill under FRS 102

In theory it is possible to revalue an intangible under FRS 102 but the criteria for doing so are quite strict.

For both old and new FRS 102 paragraph 18.18 allows a revaluation model but only if the fair value can be determined by reference to an active market, a requirement which is very difficult for intangible assets to meet.

Active market is defined in the glossary to old FRS 102 as a market in which all the following conditions exist:

• the items traded in the market are homogeneous;
• willing buyers and sellers can normally be found at any time; and
• prices are available to the public.

The glossary to new FRS 102 defines active market slightly differently as a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

The requirement for the items traded to be homogenous under old FRS 102 and the requirement for items to be traded with sufficient frequency and volume under new FRS 102 are perhaps the most significant hurdles to revaluing an intangible asset as intangibles, by their nature, are usually (but not always) unique. For example, patents and trademarks are unique to the entity that holds them and thus an active market, as defined by FRS 102, for them cannot exist.

In some jurisdictions active markets may exist for intangibles such as fishing licences or production quotas but this would need to be carefully considered on a case by case basis.

The need for willing buyers and sellers to be able to be found at any time and prices to be available to the public adds further complications.

It is not permitted to revalue an intangible asset which has not previously recognised as an asset and all intangible assets must be recognised initially at cost.

In summary, it is possible to revalue intangible assets under old and new FRS 102 but the stringent criteria to do so means that in practise, revaluing intangible assets will be a rare occurrence under old and new FRS 102.

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.