Intangible Non current Assets Examples

>> November 19, 2012


If we classify the non current assets, we can divide non-current assets into two parts. One is tangible non current assets and second is intangible non current assets. Tangible non current assets are those fixed assets which we can easily find because these have physical existence but for showing the intangible non current assets in the balance sheet, we have to confirm these assets long term benefits to the business.

Following are the main examples of intangible non current assets :- 

1. Goodwill

Goodwill is the reputation which any businessman gets for his good name or from his good behaviour. It is intangible non current asset. It can be bought or sold but there is not any physical existence. We can also compare the goodwill of different businesses. For example, Google Inc.'s goodwill is more than Yahoo Inc.


 2. Patents

Patents are also intangible non current assets. When any scientist invents anything, he can protect that thing through patents. After patent of that thing, no one can produce, distribute or sell without his permission. That scientist may deal with his business partner for producing invented product. At that time, business partner may use his patents rights on his behalf.

 3.. Trademark

Trademark is  typically a name, word, phrase, logo, symbol, design, image, or a combination of these elements. When a businessman register his trademark under the rules and regulations, after this, no one can use it without the permission of that businessman. So, it becomes the intangible non current asset of businessman.

 For example, in youtube which is the part of Google company, you can not use trademark without the permission of the owner of trademark. So, it is its benefit. You can submit your complaint to youtube directly if anyone is using your trademark without your permission  at here.

4.Copyrights

Copyrights is legal right of any creator who create the content, book, video, music, song or any other creation. No one use either personal or commercial without his permission. For using any original creation for commercial use, user has to get permission of creator. So, creator can deal for giving his permission. In simple words, we can say that there is big long term benefits of copyrights. These benefits can be received in the form of royalty. That is the reason, it is intangible non current asset.

5. Mortgage Servicing Rights

For example, you have given loan to A  Rs. 1,00,000 for security of his land. This is mortgage loan which is given by you. You will have right to get your loan. If A will not pay to you, you can sell his land for getting your money. If you sold your right to other party B, then other party gets the right to collect mortgage payment. So, this right will become B's intangible non current asset.

6. Legal Rights

Except, patent, trademark or mortgage servicing rights, there may legal rights which gives the power to owner to get financial benefits. All these legal rights are also intangible non current assets.

7. Computer Programme

You know that computer programmer spends his day and night for writing computer programme or making computer software. All are his intangible non current asset.

8.  Licenses

A license is "an authorization (by the licensor) to use the licensed material (by the licensee). From point 2 to 7, all the use of patents, copyrights, computer programmes through licenses. Except this, license may the college degree or any test for any professional work. For example in India, you can audit the accounts of company if you have qualified CA from ICAI, So, degree of CA is license for audit. If you are doing business, this will become your intangible non current asset.

8. Intangible Heritage Assets

There are lots of intangible heritage assets. For example, you find a golden coin which are related to  2,700 BC. If you sell it to any museum, you will get big money because it can be shown in exhibition. But if you melt it and then you sells it to the goldsmith, you will get very low value. So, excess value of gold coin from its physical gold value will be its intangible heritage asset.

9. Franchising

Franchising is special type of agreement. After getting franchising license, franchisee can use his trademark and brand. So, franchising rights are of franchisor. So, it is an intangible non current asset because for giving franchising rights, franchisor gets fees.

10.  Research and development expenses

 Research and development expenses are intangible non-current asset because after paying these expenses, company does not get any physical asset. These research and developments are helpful for cost saving, efficient working and invention of new methods. With this, company gets future benefits. All these expenses are shown in the balance sheet's asset side. We transfer its part to income statement's expense side through amortization.





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