Intangible Assets

What are Intangibles?

An intangible asset is an asset which lacks a physical substance. Unlike tangible assets such as machinery, intangible assets can’t be touched.

Examples of intangible assets include intellectual property such as trademarks, copyrights, and patents. Goodwill can also be an intangible asset, but is usually classified separately in accounts due to its different accounting treatment.

The cost of an intangible asset with a limited useful life such as a patent, is written off over the term of its useful life.

An intangible asset with an indefinite life, such as a trademark, is subject to an impairment review and the difference between the carrying value in the balance sheet and the recoverable amount is charged as an impairment loss.

The accounting treatment of intangible assets and the charging of amortization is more fully covered in our intangible assets tutorials

For further information see the Wikipedia intangible assets definition.

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Last modified March 23rd, 2016 by Team

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