Intangible Asset

Loading the player...

What is an 'Intangible Asset'

An intangible asset is an asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset.

To learn more about asset classes, check out "What is the difference between tangible and intangible assets?"

BREAKING DOWN 'Intangible Asset'

While intangible assets don't have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure. For example, a company such as Coca-Cola wouldn't be nearly as successful were it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset you 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
  1. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  2. Invisible Assets

    An item of value that is intangible and that cannot be seen, ...
  3. Intangible Personal Property

    Something of individual value that cannot be touched or held. ...
  4. Liquidation Value

    The total worth of a company's physical assets when it goes out ...
  5. Amortization Of Intangibles

    A tax term relating to the practice of deducting the cost of ...
  6. Active Asset

    An asset that is used by a business in its daily or routine operations. ...
Related Articles
  1. Professionals

    Natural Resource Assets

    CFA Level 1 - Natural Resource Assets. Discusses accounting for intangible assets, such as good will. Explains amortization and depreciation rules for intangibles assets.
  2. Entrepreneurship

    How to Calculate Your Tangible Net Worth

    Your net worth can be calculated with a simple equation.
  3. Economics

    Explaining Tangible Net Worth

    Tangible net worth is determined by taking total assets, then subtracting liabilities and intangible assets.
  4. Investing

    What are Intangible Assets?

    Intangible assets represent potential revenue. Take an intangible asset like brand recognition: There is value in people remembering your company and then wanting to buy its products.
  5. Investing Basics

    Goodwill and Intangible Assets: One And The Same?

    "Goodwill" is a broad category for non-physical assets that are impossible to separate from the business itself, whereas "intangible assets" are individually identifiable and can be sold separately ...
  6. Professionals

    Balance Sheet Components - Assets

    CFA Level 1 - Balance Sheet Components - Assets. Learn about the different types of assets. A top down approach into the components of long-term and current assets.
  7. Professionals

    Amortization

    Amortization
  8. Forex Education

    3. Know The Non-Current Assets

    Learning to read the balance sheet can provide great insight into the financial strength of a company.
  9. Investing Basics

    What's an Asset?

    An asset is a resource with economic value.
  10. Professionals

    Capitalizing Intangible Assets

    CFA Level 1 - Capitalizing Intangible Assets. Learn the rules governing the capitalization of various intangible assets. Includes notes on capitalizing R&D, software, patents and brands.
RELATED FAQS
  1. What types of companies have a high proportion of intangible assets?

    Explore what types of companies are most likely to have a high proportion of intangible assets, due to the nature of the ... Read Answer >>
  2. What is the difference between a spot rate and a forward rate?

    Understand the concept of intangible assets and learn how they are handled in the purchase agreement when a company is bought ... Read Answer >>
  3. What kinds of events or circumstances will increase or decrease the proportion of ...

    Learn the variety of events and circumstances which can significantly increase or decrease the proportion of intangible assets ... Read Answer >>
  4. How do intangible assets appear on a balance sheet?

    Understand how various types of intangible assets are handled in a company's accounting and which of them you can find on ... Read Answer >>
  5. How does one amortize intangible assets?

    Understand what distinguishes intangible assets and how companies are required to amortize their value over time to recover ... Read Answer >>
  6. What is the difference between tangible and intangible assets?

    Discover the difference between tangible assets and intangible assets and the types of assets that are in each. Additionally, ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center