What Are Intangible Assets?

Intangible assets have no physical appearance but are capable of providing long-term benefits to a company. Despite having no physical substance, intangible assets must be identifiable, unique and whose existence means the owner will benefit from them. They are acquired by self-creation or direct purchase.

  1. Patents

    • Rights to produce and sell new inventions are exclusive. They are grants made by a government to the creator of an invention giving him the sole right to make use and sell the invention for a period of time. For an invention to qualify for patenting, it must be original and unique.


    • Legal rights are exclusively given to an originator to print, publish, perform, reproduce, film, record artistic and/or literary work that includes book, songs, movies. Copyrights will only apply if an original idea is put into physical use and permission must be obtained by anyone else willing to reuse the artistic or literary work.


    • Trademarks include corporate logos, advertisement jingles and product names that have been registered with the government and serve to identify a company’s products. They include symbols and words that are legally registered or used to represent a company or product. Trademarks are important as they distinguish a company from its competitors, giving it a competitive edge.

    Franchise License

    • A franchise license is the right to sell certain products or services, and to use trademarks and trade names. The purchase of franchise licenses benefits the purchaser with immediate customer recognition. An example of franchise licenses is well seen in fast food restaurants such as KFC, gas stations and automobile dealerships. A relationship is formed between the individual or company (franchiser) giving another individual or company (franchisee) exclusive rights to sell, market, use trademarks and trade names of the franchiser. The franchiser obtains a distribution network through associated dealerships.


    • Goodwill arises as a result of a business establishing its reputation over a period of time. It is the excess price paid over and above the fair market value of the business as a whole. It is regarded as a quantifiable asset because from its existence the company enjoys future long-term benefits such as brand recognition, customer loyalty. All these help such an entity maintain its competitiveness in the long term.

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