Intangible asset

Examples are patents, copyright, franchises, goodwill, trademarks, and trade names, reputation, R&D, know-how, organizational capital as well as any form of digital asset such as software and data.

[2] Today, a large part of the corporate economy (in terms of net present value) consists of intangible assets,[3] reflecting the growth of information technology (IT) and organizational capital.

This is necessary in order to avoid the classification of items such as accounts receivable, derivatives and cash in the bank as an intangible asset.

Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life,[12] whichever is shorter.

[citation needed] The contribution of intangible assets in long-term GDP growth has been recognized by economists.

[citation needed] For personal income tax purposes, some costs with respect to intangible assets must be capitalized rather than treated as deductible expenses.

Treasury regulations in the USA generally require capitalization of costs associated with acquiring, creating, or enhancing intangible assets.

[19] The most valuable firms, spanning high-tech, pharmaceutical, automotive and financial services industries, derive their competitiveness and market value from intangible rather than physical, that is to say, "tangible" capital.

[20][21] Intangible assets, though not always visible, play a crucial role in shaping the success of companies and countries in today's competitive environment.

Investing in these assets helps businesses attract skilled talent, build customer loyalty, achieve market success, foster innovation and growth.

[25][23] In 2023, intangible investment accounted for over 16 percent of GDP in highly intangible-intensive economies like Sweden, the United States of America (US) and France.

In most cases, the value of intangibles can be estimated considering the future economic benefits associated with the asset, like projected cash flows.

The information gathered through interviews indicates that a supportive IP portfolio, particularly when reinforced by robust patents, plays a crucial role as a contributing factor.

In 2022, the registered amount of patent and trademark pledged lending in China reached CNY 486.9 billion, up 57.1 percent year-on-year.