What is an intangible asset?
An asset which doesn't take a physical form, with intellectual property the main example.
Key takeaways
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Intangible assets are non-physical assets like trademarks, patents, and brand recognition, unlike tangible assets such as cash, stocks, and land.
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Intangible assets can be extremely valuable, with Apple's brand name alone valued at $178 billion in 2016.
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These assets fall into two categories: indefinite assets like brand identity and definite assets like patents with limited time periods.
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Investors should consider a company's intangible assets alongside physical assets before making investment decisions.
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Intangible assets often become newsworthy during legal battles over copyright or patent breaches involving iconic brands or proprietary information.
Whereas cash, stocks and land are all tangible assets, things like trademarks, patents and brand recognition are classed as intangible. But just because an asset is intangible doesn't mean it's automatically less valuable. For example, in 2016 Apple brand name was valued at $178bn.
Where have you heard about intangible assets?
The term can hit the headlines in legal battles when a company feels its copyright or patents have been breached. This might be the case if a firm has an iconic brand identity, or a secret recipe that makes it distinct from competitors.
What you need to know about intangible assets.
Along with its physical assets, it's wise to consider a company's intangible assets before investing in it.
Intangible assets generally fall into one of two categories: indefinite or definite. An example of an indefinite (or unlimited-life) intangible asset is a company's brand identity. That's because its brand name will remain its property as long as it continues to be active. In comparison, definite (or limited-life) intangible assets can include patents and copyrights, since they may only apply for a set period of time.
Find out more about intangible assets.
Intangible assets cover very different things to tangible assets. To learn more about their key differences, see tangible assets.