An intangible asset is a non-physical resource that adds value to a business. Unlike tangible assets such as buildings or equipment, intangible assets cannot be seen or touched, but they can significantly influence a company’s financial performance and competitive advantage. Common examples include trademarks, patents, copyrights, brand recognition, customer relationships, and goodwill.

Intangible assets are classified as either identifiable or unidentifiable. Identifiable intangibles can be separated from the business and sold or licensed, like a patent or software license. Unidentifiable intangibles, such as goodwill, are tied to the company’s overall value and cannot be independently transferred.

In accounting, intangible assets may be recorded on the balance sheet if they are acquired, rather than internally developed, and their value can be reliably measured. Over time, most intangible assets are amortized, which means their value is gradually expensed across their useful life—similar to depreciation for tangible assets.

Proper valuation and management of intangible assets are crucial, especially in knowledge-based or tech-driven industries where these assets often represent a significant portion of a company’s worth. Recognizing their impact helps stakeholders understand the full value of a business beyond its physical holdings.