An intangible asset is an asset that lacks physical substance and cannot be held or manipulated. Examples of intangible assets include patents, copyrights, trademarks, goodwill, and trade names, as well as any form of digital asset such as software or cryptocurrency. Intangible assets are usually very difficult to value and suffer from typical market failures of non-rivalry and non-excludability. They are in contrast to physical assets (machinery, buildings, etc.) and financial assets (government securities, etc.).
The International Accounting Standards Board standard 38 (IAS 38) defines an intangible asset as "an identifiable non-monetary asset without physical substance". This definition is in addition to the standard definition of an asset which requires a past event that has given rise to a resource that the entity controls and from which future economic benefits are expected to flow. Thus, the extra requirement for an intangible asset under IAS 38 is identifiability. The Financial Accounting Standards Board Accounting Standard Codification 350 (ASC 350) defines an intangible asset as an asset, other than a financial asset, that lacks physical substance.
Intangible assets can be considered indefinite (a brand name, for example) or definite, like a legal agreement or contract. Intangible assets created by a company do not appear on the balance sheet and have no recorded book value. However, they can be very valuable for the owner and critical to their long-term success.
Examples of intangible assets include intellectual property, brand recognition and reputation, relationships, and goodwill. Identifiable intangible assets are assets that can be acquired or separated from the company (i.e., bought and sold) but that don’t have a physical form. Examples of identifiable intangible assets include intellectual property, like patents, trademarks, copyrights, or even non-monetary government grants, like airport landing rights or broadcasting licenses. Unidentifiable intangible assets are assets that cannot be separated from the company, like the company’s culture or management team.
