However, it also needs a strong customer list which it can’t necessarily touch. Items like brand loyalty and name recognition are still vitally important to a company, so each type of asset simply has a different type of value. Tangible assets are items you can bookkeeping and payroll services touch, while intangible assets can not be touched. Both assets may have future economic value for a company in the future.
- As with tangible assets, cost includes all the expenditures necessary to get the intangible asset ready for its intended use.
- However, it is extremely difficult to measure the amount and life of the benefits generated by these programs.
- A manufacturing company may find great value in having a manufacturing line it can touch.
- Depreciation helps to reflect the wear and tear on tangible assets during their lifetime.
- A copyright is an exclusive right granted by the federal government giving protection against the illegal reproduction by others of the creator’s written works, designs, and literary productions.
- Although these assets have no physical properties, they provide a future financial benefit for the music company and the musical artist.
- As they are used up, an expense representing this use gets carried over to the income statement.
About the IFRS Foundation
This includes using, mimicking, or copying another entity’s brand name, logo, or other intangible assets. The possessions of value owned by companies can include tangible assets and intangible assets. While the first type of asset has physical properties, the second normally does not. Unlike the other intangible assets we have discussed, goodwill is not specifically identifiable and is not separable from the firm.
