Both the International Financial Reporting Standards and the United States generally accepted accounting principles (GAAP) define intangible assets as nonmonetary assets that have no physical existence. Assets belonging to the intangible category must be identifiable and controllable and must provide inward flows of future economic benefits. Examples of intangible assets include goodwill, software, patents and copyrights, technology or technical know-how, and trademarks. Under either standard, intangible assets can be measured either at cost or revaluation method and subsequently amortized.

Loan Origination

Lenders issue loans after they complete a loan origination. This process ensues after the applicant, or the borrower, requests a loan for certain purposes, such as starting a substantial home improvement or purchasing a home. The applicant submits documents, such as bank statements and information about the collateral provided. The bank or financial institution then carries out its "know your customer" procedures, which includes credit analysis and other documentary requirements as demanded by regulatory authorities or internal policies. The process further includes verification of documents and approval or sanctioning of the facility.

Loan Acquisition Costs

For the applicant, the loan origination process is not free of costs in itself. The loan acquisition cost revolves around the costs incurred in documentation, such as legal formalities, and any bank charges paid, such as fees for loan application forms and loan origination fees. The origination fee is a fixed amount or percentage charged on the amount of the loan. The loan acquisition cost also may include penalties imposed by the bank in case documents submitted turn out to be fake or incomplete.

Transaction Settlements

Organizations pay off their liabilities by transferring their assets or the economic benefits of the asset to the creditor. Therefore, to settle transactions, businesses use tangible assets such as monetary items; which include cash, checks or government-issued bonds; or items such as share capital or contra set-off where the other party’s liabilities are canceled against the organization’s own liabilities. Businesses typically do not use intangible assets to settle transactions, but there may be times when an organization transfers its technology or patent as consideration.

Differentiating Loan Costs and Intangible Assets

Financial accounting includes assets, revenues, expenses, liabilities and capital. Each has its fundamental nature, and as such an asset cannot be deemed a cost at the same time and vice versa. Businesses can show intangible assets on the balance sheet to the extent where the true picture of the organization’s financial status displays; otherwise, misrepresentation and fraud may arise. Loan acquisition cost is an expense, and accountants include its impact on the total loan amount. Businesses cannot include intangible assets as part of the loan acquisition costs.