Intangible Assets: Defined & Explained With Examples
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What Is an Intangible Asset?
How Do Intangible Assets Work?
How Are Intangible Assets Valued?
The market approach This involves looking for similar assets that have been exchanged or purchased to come with a value of your own intangible asset. The cost approach With the method, you consider the cost of developing the asset, along with an expected rate of return. This might work for a software program your business developed. The income approach If the intangible asset produces income, you might be able to convert that into a value. This could work for intangible assets like copyrights and patents.
Identifiable vs Unidentifiable Intangible Assets
Tangible vs Intangible Assets
Cash Heavy equipment Real estate Buildings Office furniture Fixtures Computers Vehicles Inventory
Intangible Asset Examples
2. Brand equity
3. Intellectual property
5. Customer Lists
Amortizing Intangible Assets
Acquiring Intangible Assets
Making them (through R&D or another form of creation) Buying them from another business (patents, for example, can sometimes be bought) Buying a business (when a company is purchased, both tangible and intangible assets are acquired) Government grants (sometimes the government encourages growth by giving intangible assets, such as licenses to operate or land usage rights, to a company)
How Intangible Assets Interact With Balance Sheets
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Generally, it can be easier for entrepreneurs starting out to qualify for a loan from an online lender than from a traditional lender. Lantern by SoFi’s single application makes it easy to find and compare small business loan offers from multiple lenders. If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit. Traditionally, lenders like to see a business that’s at least two years old when considering a small business loan.
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