What are intangible assets?

Intangible assets refer to non-physical assets that hold value for a business, which distinguishes them from tangible assets like machinery or inventory that can be physically touched or seen. Examples of intangible assets include trademarks, patents, copyrights, goodwill, and brand recognition. These assets are crucial because they often contribute to a company's competitive advantage and overall market value, even though they do not have a physical form.

Understanding the significance of intangible assets is essential in accounting, as they can often lead to substantial future economic benefits for a company. For instance, a strong brand can lead to customer loyalty, while patents may provide exclusive rights to a technology or process that offers a competitive edge in the market.

The other options do not accurately capture the essence of intangible assets. Some refer to physical goods or market value, which do not apply to non-physical assets. Recognizing the unique characteristics of intangible assets is vital for effective decision-making in financial reporting and valuation.