Intangible Assets — Definition, Characteristics And Examples

The role of assets is very meaningful for the company. Buildings, machinery, equipment, vehicles, operational equipment are some examples of a company’s assets. Every company must have intangible and tangible assets. Each asset in the company has a different value. Assets are company resources that can be measured in certain units.

Intangible assets are often also referred to as intangible assets. Although intangible assets are very important for the company, especially if the company is going to be sold because the value of the company is not only calculated from capital but with intangible assets as well.

Definition of Intangible Assets

Intangible assets are fixed assets of a company that have a life span of more than one year. As the name implies, this asset cannot be seen with the eye because it has no physical form. These intangible fixed assets are usually managed by the company to obtain the company’s operating profit.

Characteristics of Intangible Assets

There are several types of assets that can create value for a company and have a long economic life. To find out what assets in your company are classified as intangible assets, then you must know their characteristics.

Following are its characteristics.

1. Has No Physical Form

The main characteristic that can be easily seen is that it does not have a physical form that can be seen clearly. Even though it doesn’t have a physical form, you can feel its existence. You can feel its existence because this asset has a very large role in the sustainability of the company. The company can expand its market and segmentation and develop its business if its intangible fixed assets have great value.

2. Cannot be Categorized into Financial Instruments

Intangible fixed assets can only be measured in value and are long-term in nature. You will not receive the profits right away, but you will receive them in the future. To get the value of an intangible fixed asset you have to get a claim. Furthermore, at a later date cash will be received by the company from the subject who made the claim.

3. Long-Term Assets 

The third characteristic is having a period or long-term life. Even so, there are companies that cannot measure with certainty or estimate its value. Then the company will assume that the asset has a useful life of 10 years. To determine the useful life of these assets, the company must pay attention to contractual rights or other rights under applicable law.

Examples of Intangible Assets

Some companies are sometimes not aware of the existence of intangible fixed assets, even though these assets are very useful for the company. Therefore you can see examples of intangible assets that can increase the value of the company.

1. License and Franchise

Have you ever bought a certain software that you will use for your personal laptop or office computer? When you buy software, you will get a license. Licensing is the granting of permission to a company to produce or make a product or service.

Licensing is also often interpreted as giving permission to a company or other person to use intellectual property rights. The licensor gives permission to the buyer to use the product so that the buyer can carry out production or business activities using the product from the licensor.

Franchise is a cooperative relationship between the franchisor and the franchisee. Franchisee is a person who has purchased the rights owned by franchisor to use the rights of intellectual property.

The franchise business agreement has been agreed by both parties. In the agreement, the party granting the franchise will receive compensation in accordance with the agreement that has been set for the business run by the franchisee.

2. Copyright

Copyright is a right owned by a person or company that creates something. It is given to the creator to sell or publish his work and to supervise his employees who have been or are being sold.

The owner of the work can sell the copyright to other people with a special agreement that has been agreed by both parties. To get a copyright, you have to prepare a budget in preparation, take care of copyright permissions and until you get a copyright certificate.

A clear example of copyright that often exists in everyday life is the copyright of a song or product design. If you watch television shows, news often appears about the struggle for copyright on a song.

3. Patents

A patent is granted to a person or group of people who have conducted research and discovered something new in the research. The new thing will be produced, sold and supervised within a certain period of time.

The way to obtain a patent is almost the same as a copyright, which is to pay for research, development, experimentation, image making and costs for managing patents until you receive a patent certificate.

4. Trademark Rights

When promoting, selling and distributing a product or service it must have a name and logo. Therefore we need trademark rights. Trademark rights are copyrights and the right to use a symbol on a product.

Well, even something intangible can have a very big role, right? This is a discussion of intangible assets. Hope it can inspire you all!

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