What are intangible assets?

From a business owner’s perspective an intangible asset is anything that adds value to your firm, but generally does not show up in historical-based accounting systems--unless recorded via an acquisition. For example customer relationships, trade names and contracts can be intangible assets.

Many business owners are not aware of the variety of intangible assets which should be considered for valuation. Below are some additional examples of intangible assets:

• Patents
• Non-Compete agreements
• Trade Secrets
• Know-How
• Specialist Application Software
• Intellectual Property
• Brands
• Service Marks

In accordance with the Statement of Financial Accounting Standards No. 141:

An intangible asset shall be recognized as an asset apart from goodwill if it arises from contractual or other legal rights (regardless of whether those rights are transferable or separable from the acquired entity or from other rights and obligations). If an intangible asset does not arise from contractual or other legal rights, it shall be recognized as an asset apart from goodwill only if it is separable, that is, it is capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged (regardless of whether there is an intent to do so).