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Intangible Asset: Definition and Meaning
Definition
An intangible asset is a nonphysical asset with value, such as a patent, trademark, license, customer relationship, software right, or certain contractual right.
Why It Matters
Intangible assets can be significant in acquisitions, licensing arrangements, technology investments, and business valuation discussions. Their accounting treatment may involve capitalization, amortization, impairment review, and disclosure depending on the applicable accounting framework.
Not all valuable business attributes are recorded as intangible assets. Internally developed reputation, workforce quality, and relationships may have economic value without meeting accounting recognition criteria.
Example
A purchased trademark or a customer list acquired as part of a business acquisition may be treated as an intangible asset.
Related Terms
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