BC11 The previous version of IAS 38 and the Exposure Draft of Proposed Amendments to IAS 38 stated that ‘An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from the underlying resource and also can restrict the access of others to those benefits’. The documents then expanded on this by stating that ‘in the absence of legal rights to protect, or other ways to control, the relationships with customers or the loyalty of the customers to the entity, the entity usually has insufficient control over the economic benefits from customer relationships and loyalty to consider that such items meet the definition of intangible assets’.

BC12 However, the Draft Illustrative Examples accompanying ED 3 Business Combinations stated that ‘If a customer relationship acquired in a business combination does not arise from a contract, the relationship is recognised as an intangible asset separately from goodwill if it meets the separability criterion. Exchange transactions for the same asset or a similar asset provide evidence of separability of a non‑contractual customer relationship and might also provide information about exchange prices that should be considered when estimating fair value.’ Whilst respondents to the Exposure Draft generally agreed with the Board’s conclusions on the definition of identifiability, some were uncertain about the relationship between the separability criterion for establishing whether a non‑contractual customer relationship is identifiable, and the control concept for establishing whether the relationship meets the definition of an asset. Additionally, some respondents suggested that non‑contractual customer relationships would, under the proposal in the Exposure Draft, be separately recognised if acquired in a business combination, but not if acquired in a separate transaction.