Intangible assets

RECENT NEWS
Forbes  Oct 2  Comment 
Increase the value of your business by paying attention to your intangible assets—more than 80% of your company's value—with these 4 tips.
New York Times  May 4  Comment 
The wildly divergent paths of the top two picks in the 1998 N.F.L. draft have become shorthand for the frustrating process of identifying character traits that lead to success.
guardian.co.uk  May 4  Comment 
Startups struggle to get loans because banks don't know how to value their knowledge. Enter M.CAM, a company that underwrites lending on intellectual property When David Cameron and George Osborne went out to talk up Britain's economy before the...
SeekingAlpha  Feb 23  Comment 
By NullDelta: Valuing intangibles has been consistently a problem for most industries, even moreso for an industry like 3D printing. Patents could become a potential key for dominating the market once a technical victor arises out of the...
The Economic Times  Nov 13  Comment 
The acquisition process in today's business environment, is less about companies and their physical resources and more about the intangibles, the survey said.
The Hindu Business Line  Sep 8  Comment 
The Companies Bill requires directors to state that internal financial controls exist for orderly conduct of business.
Forbes  Jul 22  Comment 
In my previous column, I discussed intangible assets as intellectual property (IP) and recommended every small business have an IP strategy.
Barel Karsan  Aug 21  Comment 
As value investors, we are trained to look at the "Goodwill" and "Intangibles" lines on a company's balance sheet with great skepticism. After all, these supposed company assets are not hard assets like equipment or land or receivables and...
Forbes  Aug 1  Comment 
Light-emitting diodes (LEDs) will soon dominate the lighting market. Few (if any) market watchers would disagree with that statement. In fact, analysts at A.T. Kearney predict that LEDs could capture as much as 90% of the lighting market by 2020.
Financial Times  Jun 11  Comment 
Several US lenders want to tap the value of the intellectual property holdings of their borrowers as a way of trimming their capital requirements




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Intangible Assets are non-physical assets on a company's balance sheet

Intangible assets are assets that cannot be physically seen or touched. In general this includes things like intellectual property (such as patents and trademarks), brand recognition, and trade secrets. On the balance sheet, intangible assets add to the total asset value and, as such, are a component of the total book value.

While the value of intangible assets is harder to calculate than physical assets such as equipment or factories, intangibles have no less real value than their physical counterparts. There are several methods used in calculating the value of intangible assets, all of which rely on an accountant or accountants' estimates of worth.

In most cases, GAAP does not allow internally generated intangibles to show up on the balance sheet. For example: Coco-Cola corporation would not list the value of its brand on its balance sheet. On the other hand, if a company pays more than the fair value to acquire another company, the difference is shown as goodwill in the acquirer's balance sheet. Also, research-based companies, such as drug-manufacturers, are allowed to capitalize their research and development expenses -- since, in theory, research provides value long after it has been completed.

Some intangibles are amortized, i.e. written off, as expense over time. Under the U.S. GAAP goodwill cannot be written off as expense unless the company has a reason to believe that it has reduced in value. Amortization of intangibles decrease income of the company and hence offer tax benefits.

It should be noted that goodwill, while technically itself an intangible asset, can be listed separately on the balance sheet. In other words, a balance sheet may list intangible assets and goodwill separately or together.

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