Examples of Intangible Assets

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 could 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 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 belonging to 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, the latter category of assets can be explained as those resources that cannot be physically felt and measured, it includes lots of things, that may not be normally considered as an asset. 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 an asset, ordinarily. But, 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 one of the important examples of intangible assets. 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.

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 consists 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, these are highly valued and preserved by companies. Earlier, tangible assets formed a major part of the economy, but now, almost 50% are intangible ones.