Definition of Intangible Assets
Intangible assets are economic resources controlled by a business entity without physical substance. By no physical substance, we mean that these cannot be touched or felt.
Examples of Intangible Assets:
Some common examples are patents, trade secrets, the right to use certain technology, software, research and development, goodwill, etc.
Unlike tangible assets, these assets may or may not have a finite economic life. An intangible asset like the right to use a certain technology is useful for a finite period of time because after some time the technology might become obsolete and hence will no longer be useful for the business. For such intangible assets, a business should charge amortization over its useful life.
For those intangible assets that have infinite useful life such as goodwill, no amortization is charged. Instead, it is tested for any impairment loss at the end of every year-end.