What are Intangible Assets and Why they are Important

What are Intangible Assets and Why they are Important

Intangible assets are those assets of a company that are not physically represented. In other words, the money or the machinery that a company uses for its activity are tangible assets.

At the same time, the recognition or value of the brand would be an intangible asset. According to the General Accounting Plan, these assets are “non-monetary, without physical appearance, susceptible to economic valuation.”

This means that, although they cannot be seen or touched due to their immaterial nature, they affect your company’s value. What is an intangible asset, and what is not? For an asset to be classified as intangible, it must meet various requirements.

First of all, they must meet the definition of a good or asset – that is, those elements controlled by your company –and also meet the asset recognition criteria – which means that they have to give some benefit. Finally, they must be identifiable, that they can be sold or used by the company itself, or by other corporations, for a certain purpose.

On the other hand, it is necessary to clarify that would not include human capital in this category. For everything analyzed so far, it could be.

However, we are missing the most important part. A small connotation that, in this case, acquires important relevance is that the effort of each worker is, in reality, of each one of them. That is, cannot sell it, cannot sell it. In addition, it is not controllable by companies, so it cannot be considered an asset owned by the corporation.

Finally, there would be an intangible asset that comes from other tangible assets. This is the case of acquiring a brand or company from another. The intangible asset comes from another tangible: the contractual right.

Classification of intangible assets can be classified into different groups: According to your own identity. As they can be identified (such as trademarks and copyrights), or if they are not identifiable (advertising and organization expenses).

By way of joining the company. As is the case with exchanges or transfers, one can acquire them, and they can be developed in-house (development costs) for his period of life. If the brand is renewable, they can be perpetual intangible assets or limited by contract (such as concessions), depending on whether they can be divided for sale.

According to accounting recognition, cannot separate some intangible assets cannot separate intangible assets, and others can be separated and sold. Depending on their record, they may or may not be accounting.

Finally, it is important to know that you can transfer the right of use over these intangible assets, such as patents and copyrights.

This action can serve to finance us and obtain liquidity at a given time due to the transfer of those rights. Certain intangible assets may have a high market value, so we must appraise them appropriately during the assignment or sale process.

For example, another corporation can exploit copyright and generate added benefits afterward. We must try to predict the use and exploitation that a competitor can make of that intangible asset.

If liquidity is needed, it may be better to use alternative financing formulas that currently exist in the market and allow us to maintain ownership of corporate intangibles.

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