Intangible Asset

Intangible asset

A legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual property, patents, copyrights, and trademarks are examples of intangible assets.

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Intangible Asset

In accounting, any asset that cannot be seen or touched. Intangible assets include things like patents and brand recognition, which add value to a company, but are difficult to price. Intangible assets explicitly do not include actual things, such as widgets, a widget factory, or the land upon which the widget factory is built. Because of the difficulty in pricing, intangible assets are sometimes not included in a company's valuation. However, not including them may not express the company's true value. See also: Tangible assets.

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intangible asset

An asset such as a patent, goodwill, or a mining claim that has no physical properties. Since intangible assets are often difficult to value accurately, such assets when included on a corporate balance sheet may have a true value significantly different from the dollar amounts indicated there. Compare tangible asset.

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Intangible Asset

What Does Intangible Asset Mean?

A company's nonphysical assets, such as intellectual property (items such as patents, trademarks, copyrights, and business methodologies), goodwill, and brand recognition; an intangible asset can be classified as either indefinite or definite. A company's brand name is considered an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company entered into a legal agreement to operate under another company's patent, with no plans for extending the agreement, it would have a limited life and would be classified as a definite asset.

Investopedia explains Intangible Asset

Although intangible assets do not have the obvious physical value of a factory or equipment, they can prove very valuable and can be critical to a company's long-term success. For example, a company such as Coca-Cola would not be nearly as successful without the high value obtained through its brand-name recognition. Although brand recognition is not a tangible asset that one can see or touch, its positive effects on bottom-line profits can prove extremely valuable to firms such as Coca-Cola, whose brand strength drives global sales year after year.

Related Terms:
• Asset
• Balance Sheet
• Generally Accepted Accounting Principles—GAAP
• Goodwill
• Tangible Asset