Intangible assets are assets with no physical form. For example, trademarks, brand names and technologies are considered intangible assets.
Intangible assets can be definite or indefinite. Definite intangible assets belong to a business for a specified duration of time. For example, patents are definite intangible assets because they’re only valid for a period of time. The brand name of a business is an infinite intangible asset, as it belongs to the business forever.
When a business reports an intangible asset, it adds up all the costs incurred to create or purchase the asset. For example, a company pays $20,000 to develop a technology. To patent this technology, it pays $5,000 to hire a patent lawyer. Therefore, the expenses associated with this patent are $25,000, even when the asset may be worth $1 million.