1- Definition of intangible assets 2- Types of intangible assets 3- Accounting treatment of intangible assets 4- Amortization of intangible assets, supply and other significant related issues

Answer

1. Definition of intangible asset :- an identifiable non-monetary asset without physical substance. An asset is a resource that is controlled by the entity as a result of past events (for example, purchase or self-creation) and from which future economic benefits (inflows of cash or other assets) are expected. Thus, the three critical attributes of an intangible asset are:

(a) identifiability

(b) control (power to obtain benefits from the asset)

(c)future economic benefits (such as revenues or reduced future costs)

2. Type of intangible assets:-

Brand equity (recognition)

Intellectual property (i.e. know-how)

Company reputation.

Goodwill.

Copyrights.

Trandmarks.

Patents.

Franchises

3. Accounting treatment of intangible asset:-

When you have assets, you are responsible for recording their value.

Include assets on your business’s balance sheet. The balance sheet is a financial statement that displays your business’s assets, liabilities, and equity. Assets appear first on the balance sheet. Intangible assets appear after your current assets (liquid assets that can be quickly converted into cash) on the balance sheet.

When you amortize intangible assets, you must include the amortized amount on your income statement.

4. Amortisation of intangible asset :-

Amortization is the process of spreading out an intangible asset’s cost over a certain period of time in accounting. This paints a more realistic picture of your company’s health and helps to level out your tax liabilities throughout the useful life of intangibles.

The useful life of intangible assets is the duration it contributes to your business’s value.