Brief Definition
Intangibles are non-physical assets that a company owns, which provide value and potential future benefits but do not have a physical presence. These assets can include intellectual property, brand reputation, trademarks, patents, copyrights, goodwill, and customer relationships.
Further Explanation
Intangibles are non-physical assets that a company owns, which provide value and potential future benefits but do not have a physical presence. These assets can include intellectual property, brand reputation, trademarks, patents, copyrights, goodwill, and customer relationships. Intangible assets are crucial for a company’s competitive advantage and often play a significant role in its overall valuation. Unlike tangible assets like machinery or buildings, intangibles can be more challenging to value and may require regular reassessment for impairment.
Example:
A software company owns a patent for a unique algorithm. This patent is an intangible asset, as it represents valuable intellectual property that can generate future revenue through exclusive usage or licensing to others. Additionally, the company’s strong brand reputation and loyal customer base are also considered intangible assets, contributing to its market value and competitive edge.