What is Intangible Asset?
Nexa Consultancy | Startup & Finance Glossary
An Intangible Asset is an asset that is not physical in nature but still provides long-term value to a company. Examples include patents, copyrights, trademarks, brand recognition, and goodwill. These assets are recorded on the balance sheet and are "amortized" (expensed) over their useful life.
For Startups: For many tech startups, intangible assets are their most valuable assets. The software code they have written, the brand they have built, and any patents they have filed are the core drivers of their valuation. Correctly accounting for and legally protecting these assets is crucial.
Example: A startup spends ₹10 Lakhs on legal fees to file a patent. This cost is capitalized as an intangible asset on the balance sheet and then amortized over the life of the patent.