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What Are Intangible Assets? - Definition & Types

What Are Intangible Assets? - Definition & Types
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  • 0:03 Intangible vs. Tangible Assets
  • 0:43 Examples of Intangible Assets
  • 1:47 Definite vs. Indefinite Assets
  • 2:47 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

Determine how to separate intangible assets from tangible assets. Intangible assets are those that include goodwill, patents, and copyrights. Also find out more about how to classify an intangible asset as definite or indefinite.

Intangible vs. Tangible Assets

Liam is collecting information on his company's assets - both tangible and intangible. He needs a complete inventory and begins with tangible assets. These are assets that are physical in nature. Examples include land, equipment, machinery, vehicles, and stocks. Tangible assets are pretty straight-forward: they are things we can see, hear, and touch. The company also has several intangible assets, which are assets that don't have any physical form to them and are somewhat difficult to value. Examples are goodwill, patents, and copyrights, which we'll take a look at right now.

Examples of Intangible Assets

Goodwill is an intangible asset that includes customer base, brand recognition, and proprietary technology. For Liam to calculate the company's goodwill, he had to determine a company's fair value above its book value. Examples can include your company's reputation and its brand.

Patents are time-sensitive licenses, usually 20 years, given by the U.S. Patent and Trademark Office to holders, designating exclusive rights to a specific design or invention. Liam's company has a patent for creating a new type of caffeine-free coffee. Other examples of patents your company might obtain are utility, design, and plant patents.

Copyrights are rights to intellectual properties that provide only the owner, and whomever the owner gives permission to access, to copy the property. Liam's company has a new jingle associated with its new coffee line, so this is a copyright he has to value. Additional examples of copyrights you're probably familiar with include software, art, and popular music.

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