An asset that is not physical in nature.
Corporate intellectual property (items such
as patents, trademarks, copyrights, business
methodologies), goodwill and brand
recognition are all common intangible assets
in today's marketplace. An intangible asset
can be classified as either indefinite or
definite depending on the specifics of that
asset. A company brand name is considered to
be an indefinite asset, as it stays with the
company as long as the company continues
operations. However, if a company enters a
legal agreement to operate under another
company's patent, with no plans of extending
the agreement, it would have a limited life
and would be classified as a definite asset.
While intangible assets don't have the
obvious physical value of a factory or
equipment, they can prove very valuable for
a firm and can be critical to its long-term
success or failure. For example, a company
such as Coca-Cola wouldn't be nearly
as successful were it not for the high value
obtained through its brand-name recognition.
Although brand recognition is not a physical
asset you can see or touch, its positive
effects on bottom-line profits can prove
extremely valuable to firms such as
Coca-Cola, whose brand strength drives
global sales year after year.
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