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Examples of Intangible Assets

Clear Your Doubts With Examples That Explain Intangible Assets

Assets are classified into two main types - tangible and intangible. Go through this article for some information about intangible assets.
WealthHow Staff
Last Updated: Jun 3, 2018
Most of us are familiar with the term asset. This term is used to denote those economic resources that are owned and controlled by a person or a firm. One of the important aspects of an asset is that it should be of some economic value, i.e., it can be converted into cash. Money, along with other valuables that can be converted to money, are classified as assets. There are two major types of assets - tangible and intangible assets.

What are Intangible Assets?

Examples of assets include real estate, car and other vehicles, cash, accounts receivable, jewelry, office equipment, machinery in industry, insurance, trademarks, copyrights, and patents. All these are considered assets. In short, assets owned by a person or a firm, are those economic resources that can be converted into cash. As mentioned above, there are two types of assets, called tangible and intangible.

While assets like land, cash, building, and equipment, can be seen, and are real and actual; there are certain assets like copyrights and patents, that cannot be seen and measured physically. The first category of assets that are physically seen and perceived are called tangible assets, and those in the second category are called intangible assets. Even though, intangible forms are of real value, they cannot be physically touched or measured.

Examples

While it is easy to record and value tangible assets, it is not that easy, in case of intangible assets. Even though, intangible assets can be described as those resources that cannot be physically felt and measured, they include lots of things, that may not be normally considered as assets. Most of these assets cannot be directly converted into cash, but affects the finances in an indirect way. The concept of intangible assets is very complex. It can be explained with the help of some examples.

As mentioned above, a copyright, trademark, or a patent may not be considered as assets, ordinarily. However, think about the brand recognition of a particular company, which is mostly generated by its logo and brand name. Whatever maybe the product, a brand name holds an important role in the income generated by a company. Hence, intellectual property is an example of intangible asset. The expertise of the employees of a firm, is not a physical item that can be measured, but it is also a vital, intangible asset for the firm. Even the customer database, the relation with the clients, customer satisfaction, reputation of the company, and the technology, are also counted as intangible assets.

Legal and Competitive types: So, apart from the different types of intellectual property, there are various other things that are classified as intangible assets. These assets are divided into legal and competitive types. The legal intangible assets consist of intellectual property that confers some legal rights on the holder. Others like brand recognition, customer satisfaction, and expertise of employees, come under competitive assets.

From these examples, you must have understood that valuing intangible assets can be a difficult task. Such valuation is based on the future monetary effects of such assets. Even though, intangible assets may not be physically sensed, they are highly valued and preserved by companies. Earlier, tangible assets formed a major part of the economy, but now, almost 50% are intangible ones.