Hi Its Ify?
Hope your week has been great?
A reader from the previous post sent me a mail about her confusing on how one can physically hold on to an intellectual property. I had to break it down for her what the different between physical property and non physical property were, or in the right terms, what tangible and intangible property or assets were.
What is an Intangible Asset?
An intangible asset is an asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. Intangible assets exist in opposition to tangible assets, which include land, vehicles, equipment, and inventory.
Understanding an Intangible Asset
An intangible asset can be classified as either indefinite or definite. My company's brand name “Legalipcoach” is considered an indefinite intangible asset because it stays with the company for as long as I continue operations.
An example of a definite intangible asset would be a legal agreement to operate under another company's patent (innovation) for example, with no plans of extending the agreement. Therefore, the agreement has a limited life and is classified as a definite asset.
While an intangible asset doesn't have the obvious physical value of a factory or equipment, it can prove valuable for a company and be critical to its long-term success or failure.
For example, we all know and love Coca-Cola; a business such as Coca-Cola wouldn't be nearly as successful, if not for the money it has made through brand recognition (its trademark). Although brand recognition is not a physical asset that can be seen or touched, it can have a meaningful impact on generating sales.
Valuing Intangible Assets
Businesses can create or acquire intangible assets. For example, a business may create a mailing list of clients (like Dominos) or establish a patent (like Pharmaceutical Companies who own our daily paracetamol).
If a business creates an intangible asset, it can write off the expenses from the process, such as filing the patent application, hiring a lawyer and other related costs. So in the long run, all the expenses along the way of creating the intangible asset are eventually expended.
KEY TAKEAWAYS
An intangible asset is an asset that is not physical in nature, such as a patent, brand, trademark, or copyright.
Businesses can create or acquire intangible assets.
An intangible asset can be considered indefinite (a brand name, for example) or definite, like a legal agreement or contract.
Intangible assets created by a company can be expended off
There you have it! You'll be looking forward to creating yours now, I bet.
Yours Truly,
Legalipcoach
Disclaimer: The information contained in this guide in not meant as a substitute for professional legal advice. Its purpose is to provide basic information on the subject matter. Have more questions, send me a mail at legalipcoach@gmail.com