Home Investing Dictionary Investment Term Intangible assets
Intangible assets
Written by Kenny Foo   
Friday, 13 March 2009 16:25
Intangible assets is assets for corporation which is not physical in nature and it can't be touched and seen .  Normally, intangible assets take time and effort that are identifiable to create it. The opposite of intangible assets are tangible assets which have physically exist. Basically, there are two forms of intangible assets - legal intangible assets and competitive intangible assets. Legal intangible assets, as its named, are intangible assets that are protected by law such as trade secrets, goodwill, trademarks, patents, and copyrights. Hence, legal intangible assets are also known as intellectual properties. Another type of intangible assets, competitive intangible assets, which are not defensible in court of law, directly impact productivity, cost, revenues, satisfaction, market value, effectiveness and share price. Some examples of competitive intangible assets are leverage activities, structural activities and others. Basically, competitive intangible assets are intangible assets that may impact corporation's ability to compete with other competitors. Besides, intangible assets also can be classified into two category based on its useful life - indefinite and definite. Indefinite intangible assets are intangible assets that will last forever while definite intangible assets are intangible assets that expect to have a duration of useful life. Definite intangible assets will face amortization and its value will be reduce every year until it become zero value. For examples, company brand name will exist forever as long as the company is operating. Thus, company brand name is indefinite intangible assets. Another example for definite intangible assets, corporation ABC files a patents for 5 years. This patents is definite intangible assets and expected to have its value reduce through amortization every year until it become zero value. Intangible assets are parts of fixed assets and will be recorded in balance sheet.

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Last Updated ( Saturday, 14 March 2009 11:14 )
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