Definition of Intangible asset:
Additionally, financial assets such as stocks and bonds, which derive their value from contractual claims, are considered tangible assets.
Reputation, name recognition, and intellectual property such as knowledge and know how. Intangible assets are the long-term resources of an entity, but have no physical existence. They derive their value from intellectual or legal rights, and from the value they add to the other assets. Intangible assets are generally classified into two broad categories: (1) Limited-life intangible assets, such as patents, copyrights, and goodwill, and (2) Unlimited-life intangible assets, such as trademarks. In contrast to tangible assets, intangible assets cannot be destroyed by fire, hurricane, or other accidents or disasters and can help build back destroyed tangible assets. However, they normally cannot be used as collateral to raise loans, and some intangible assets (goodwill, for example) can be destroyed by carelessness, or as a side effect of the failure of a business. Whereas tangible assets add to an entitys current market value, intangible assets add to its future worth. An approximation of the monetary value of a firms intangible-assets is computed by deducting the net value of its tangible assets from its market value. In some cases (such as the Coca Cola trademark), the value of a firms intangible assets far outweighs the value of its tangible assets.
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. Intangible assets exist in opposition to tangible assets, which include land, vehicles, equipment, and inventory.
How to use Intangible asset in a sentence?
- An intangible asset is an asset that is not physical in nature, such as a patent, brand, trademark, or copyright.
- Intangible assets created by a company do not appear on the balance sheet and have no recorded book value. .
- An intangible asset can be considered indefinite (a brand name, for example) or definite, like a legal agreement or contract.
- Companies like McDonalds and Chevrolet are able to make incredible profits, in large part, because they are rich in intangible asset s.
- I was interested in exactly what an intangible asset was and how it applied to our company and our everyday work.
- Businesses can create or acquire intangible assets.
- When Larry was retiring from IBM after forty years, his boss, Frank, was reticent about the intangible asset they were losing in his vast experience with the rapid evolution of the companys technology after four decades.
Meaning of Intangible asset & Intangible asset Definition