Intangibles

Intangibles are assets or asset-like factors that lack physical form but can generate future economic benefits. In economics and business, they include both recognized assets on financial statements and less-concrete sources of value such as knowledge, relationships, and brand strength. Intangibles are often contrasted with tangible assets like machinery or real estate.

Common categories of intangible assets include brands and reputation, intellectual property (patents, trademarks, copyrights), software, databases, licenses, and customer-related intangibles such as lists and relationships. Goodwill arises when one company acquires another and pays more than the net identifiable assets; it reflects synergies, workforce, and other near-term advantages.

In accounting, recognition of intangible assets follows standards (IFRS/GAAP). An asset is recognized if future benefits are probable and cost can be measured. Finite-lived intangibles are amortized over their useful life; indefinite-lived ones are not amortized but tested for impairment regularly. Goodwill is not amortized but impaired if recoverable amount falls below carrying value.

Valuation approaches vary: income approach (discounted cash flows estimating future benefits), cost approach (replacement cost), and market approaches (comparable transactions). Intangible valuation is sensitive to assumptions about growth, duration, and risk, and often relies on specialized methods.

Economic role and challenges: Intangibles account for a growing share of firm value in technology and service sectors. They enable differentiation and scalable value but are harder to measure and compare than tangible assets. Regulatory disclosure requirements for intangibles differ across jurisdictions and can affect investor assessments.