Definition:

Intangible assets are non physical things that are valuable. They are typically legal rights to something that could generate future revenue or be sold. Examples include Patents, Options to purchase or sell something at a set price, ownership of Brands or Copyrights, etc. Like tangible assets they can decline in value over time. This is reflected in the financial statements by amortizing the asset (for tangible assets this is known as depreciation).

Example:

If your company’s trademark is worth $10,000, this amount is recorded in your intangible assets.

Why it matters:

Intangible assets like films, songs, software, brands, or patents can make up a significant part of a company’s value and must be considered when estimating what a company is worth.