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intangible assets Definition

Asset definition

Assets are defined as resources or things of value that belong to a company as a result of its transactions and include expenses paid in advance that have not yet been consumed or not yet completed as well as costs that have a future value that can be measured. Market value and long-term assets such as buildings and equipment are depreciated and will therefore be reported at less than their cost, and accountants classify balance sheet accounts presented in distinct groups, categories or classifications where they show the types of assets and the most important types of assets that are classified and the order of their appearance in the balance sheet are current assets And fixed assets and financial assets as well as the definition of intangible assets.

intangible assets Definition

Companies own a variety of physical assets such as buildings, computers, and equipment. These things are tangible, that is, they can be touched or seen, as well as types of intangible assets that can not be touched or seen, such as goodwill, patents, trademarks, copyrights, and so on. Intangible assets that have value and include franchises, goodwill, non-reserve agreements, patents, etc. They are considered something of value to the company that is not physical, such as a good reputation or something that does not exist in a physical way but has value to the business such as a brand name, and a large portion is allocated From the acquisition price to the definition of intangible assets including goodwill.
intangible assets Definition
intangible assets Definition

Types of intangible assets

Assets without physical substance are created daily, continually expanding the definition of an intangible asset Any resource that an entity controls as part of a purchase or self-creation process create the types of intangible assets that are of certain economic benefit, while their intangible nature may make their value To some extent subjective, these assets are the ones that govern the legitimacy of work and control production, and the types of intangible assets are:
  • Goodwill: This tangible is often recognized when a business acquires another business and represents the excess of the cost that the purchasing business pays over the value of the business's assets acquired.
  • Copyright: Granting copyright allows a buying company to continue creating and selling the services or products of the purchased company.
  • Patents: A patent is granted to a manufacturing or research company that has control over the use and sale of the patent and its own design.
  • Intellectual property: songs, designs, trademarks, and inventions are intangible assets. Additional intangible belongings encompass software program licenses, movement pictures, purchaser lists, and franchises.

Acquisition of intangible assets

The definition of intangible assets is characterized by the absence of a tangible physical entity for them, and one of its most important characteristics is the uncertainty of the likely benefits to be obtained from the use of these assets due to the difficulty of predicting the useful life due to the absence of physical life of the asset on the one hand and the difficulty of predicting the period during which the asset can bring benefits to companies The types of intangible assets are obtained through a variety of methods, the most common of which is acquiring all assets during the acquisition or merger of the company. There are several other methods, including the following:
  • Separate purchase: Assets can be purchased from an existing company, like buying normal services for the right price. Companies will give up things like patents and other production rights to the buyer.
  • Government grants: In some cases, intangible assets are obtained free of charge through the use of a government grant, for example, the government may transfer or allocate intangible assets to a company such as operating licenses or land use rights.
  • Asset exchange: A company can be purchased by purchasing its assets in exchange for cash or shares from the purchasing company.

Examples of intangible assets

While intangible assets do not have a physical shape or size, they provide a lot of strength to the company, as these assets can be used in many ways to grow the business or increase profits, although the definition of intangible assets does not contain any intrinsic substance it can Finding intangible assets in all business areas, for example:
  • Technology such as technical manuals, engineering processes, and computer software.
  • CRM.
  • Contracts, franchises, licenses and permits.
  • Trained and qualified workers are called workforce in place.
  • Customer Relationships Including Goodwill The value of customer relationships.
  • Trade secrets and brand recognition.
  • Advertising and marketing campaigns and materials.
  • Site-related assets such as land, water, and mining rights.
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