intangible assets
Non-physical assets that have value, including intellectual property, patents, trademarks, brand recognition, and customer relationships.
Example
“Apple's brand value, patents, and software are intangible assets worth far more than its physical factories and equipment.”
Memory Tip
INTANGIBLE assets = you can't TOUCH them. Brands, patents, customer lists — invisible but valuable.
Why It Matters
Intangible assets matter because they represent a significant portion of a company's real value, often more than physical assets. Understanding them helps you make better investment decisions and assess whether a company is truly worth what its stock price suggests.
Common Misconception
Many people think intangible assets are worthless because you cannot touch them or see them in a warehouse. However, these assets often generate ongoing revenue and competitive advantages that make companies far more valuable than their physical equipment alone.
In Practice
When Facebook purchased Instagram for 1 billion dollars in 2012, most of that price was for intangible assets like the user base, brand recognition, and technology. Instagram had minimal physical assets or revenue at the time, but its customer relationships and technology platform made it extraordinarily valuable to Facebook.
Etymology
From Latin 'intangibilis' (not touchable) — assets you cannot physically TOUCH but still have value.
Common Misspellings
Small business accounting made simple
Related Terms
More in accounting
Other accounting terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.