Intangible assets include patents, copyrights, and intellectual property. Tangible assets include land, buildings, equipment, and vehicles.
It is a non-physical asset that has value to the company. It is an intangible asset that has measurable effect, such as cost (e. g. purchase price, taxes), that can benefit the company. The cost of preparing an intangible asset is attributed to the asset’s intended use. For instance, an acquired patent is purchased for its intended use of protecting patent rights for an invention. Assets resulting from development are recognized as an intangible asset if the completion of the intangible asset will be used or sold, it can generate future benefits, the expenses attributed to the intangible asset can be measured, and there are available resources to complete the development. [2] X Research source
Patents Copyrights Trademarks Intellectual Property Franchise rights Business licenses
Goodwill (except for private companies) Brands Mastheads or Logos Publishing titles Customer lists
Costs cannot be accumulated for making the invention, but can be for applying for a patent.
The useful life of a patent could change over time due to technological advances. If you assumed the patent was useful for 20 years, but after 10 years the value of the technology became useless, you can expense (write off) the remaining value.
To calculate the monthly amortization amount, divide the yearly amount by 12.
The amount that is amortized per year goes on the income statement.
