What is an Intangible Asset?
An intangible asset is an asset that lacks a physical substance.
How Does an Intangible Asset Work?
The line item for intangible assets is found on the balance sheet. Though goodwill is considered an intangible asset, it's often listed as a separate line item.
[InvestingAnswers Feature: Financial Statements for Beginners -- The Balance Sheet]
Why Does an Intangible Asset Matter?
Intangible assets can be a significant percentage of a company's total assets, and therefore have a big impact on a firm's book value. In most cases, an analyst calculating book value will only include those intangible assets that can be separated from the company and sold. Goodwill cannot be separated from the company, so it is generally not included in book value calculations. But a valuable patent can be sold, and would be included in book value.
To learn more, click here to see A Simple Method for Calculating Book Value.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
There are some questions you tend to expect when you walk into a job interview these...Read More →