Reading the accounts
Intangible assets
Non-physical assets with value: patents, trademarks, software, licences and customer relationships.
How it works
Purchased intangibles appear on the balance sheet; internally generated ones usually do not. A company that built its brand over decades typically carries none of that value as an asset.
This is the single biggest reason book value has become less informative over time, as economies have shifted towards intangible-heavy businesses.
Related terms
- GoodwillThe premium paid over the fair value of a business’s identifiable assets when acquiring it.
- Book valueWhat the balance sheet says shareholders own: total assets minus total liabilities.
- Price-to-bookMarket value divided by the accounting value of the company’s net assets.
- Depreciation and amortisationSpreading the cost of a long-lived asset across the years it is used, rather than expensing it at once.
Mentioned in
More in Reading the accounts
- Interest coverage
- Income statement
- Inventory
- Gross margin
- Liabilities
- Net debt
- Going concern
- Net debt / EBITDA
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.