Intangible assets like patents, trademarks, and goodwill define a company's strategic advantage and market value. These non-physical assets, crucial for innovation and competitive edge, vary in their useful life and are subject to different accounting treatments such as amortization for finite-lived assets and impairment tests for goodwill. The valuation of intangible assets is complex, involving cost, market, and income approaches to determine their contribution to a company's identity and market power.
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Intangible assets are non-physical assets that contribute to a company's value through the rights and economic benefits they provide
Indefinite-lived Intangibles
Indefinite-lived intangibles, like certain trademarks, have an ongoing value without a foreseeable limit
Definite-lived Intangibles
Definite-lived intangibles, such as patents, have a specific duration and are subject to amortization over their useful life
Intangible assets are essential for a company's strategic advantage and growth
Intellectual property (IP) is a key subset of intangible assets that includes legally recognized exclusive rights to creations of the mind
IP rights protect the interests of creators by giving them property rights over their inventions and works
The valuation of IP is a significant contributor to a company's market value, as seen in technology-driven firms like Apple Inc