Intangible assets have two primary traits. They do not have physical existence and they are not financial instruments. Intangible assets acquire value from the rights and privileges granted from using them.Purchased intangible assets are recorded at cost and costs incurred to create intangibles internally are normally expensed.

• Imagine you are the chief financial officer of a company with valuable internally created intangible assets. Come up with an argument supporting the inclusion of the intangibles on the balance sheet at fair market value. What are the risks and challenges involved in assigning a dollar value to internally created intangible assets?