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Intangible Asset

What is an Intangible Asset?

An intangible asset is an asset that lacks physical substance but has value to a company because of the rights or privileges it confers. Unlike tangible assets such as buildings, equipment, and inventory, intangible assets cannot be touched, seen, or felt.Examples of intangible assets include patents, copyrights, trademarks, trade secrets, customer lists, brand recognition, goodwill, and software. These assets are often considered intellectual property and can be a significant source of competitive advantage for a company.Intangible assets are typically recorded on a company's balance sheet at their original cost and amortized over their useful life. The useful life of an intangible asset is the period over which it is expected to provide benefits to the company. Some intangible assets, such as trademarks and copyrights, have a finite life and are amortized over a specific period. Others, such as goodwill, have an indefinite life and are tested for impairment annually.Intangible assets can be valuable assets to a company, but they can also be difficult to value and quantify. They are often subject to legal and regulatory requirements and may require ongoing investments to maintain and protect. Companies must carefully manage their intangible assets to ensure that they are properly recognized, valued, and protected.