intangible asset

Intangible assets are those assets that do not have a physical presence. In business, intangible assets include such things as intellectual property (IP) and brand recognition.

Ideally, because intangible assets can be classified as business assets, they should appear on a company's balance sheets. In reality, accounting standards in many countries mandate that businesses can only recognize intangible assets that have been acquired. This mean that a company can only list intangible assets that have been purchased or received as part of an acquisition of another business. In some countries, the costs associated with establishing, maintaining and protecting intangible assets is tax deductible.

Intangible assets that are a part of a company’s valuation often play an important role in future profitability. For example, the copyrights, trademarks and patents a company owns are generally associated with ensuring the protection of planned products and services that the company expects to profit from in the future.