What is an Intangible Asset?

Answer:
Intangible assets are items of value that cannot

be touched. Even though they do not have a physical presence, they provide value to the business or individual who has ownership rights to them.

For an item to be classified as an intangible asset, it must not have a physical presence, yet must be identifiable. Additionally, the item must be controlled by the business or individual claiming it as an intangible asset, and there must be potential for future economic benefits associated with control of the asset.
Items that are classified as intangible assets include:
·    Copyrights
·    Franchises
·    Goodwill
·    Patents
·    Trademarks

Intangible assets can be very difficult to evaluate. Generally Accepted Accounting Principles (GAAP) requires that intangible assets of a business, other than goodwill, be amortized.


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