3.2.2. Intangible assets

Intangible assets are economic resources that have no physical existence, such as patents, trademarks, copyrights and goodwill. Accounting for intangible assets differs depending on the type of asset, and they can be either depreciated or tested for impairment each year:

  • Intangible asset whose lifetime can be defined are depreciated, just like tangible assets.
  • Intangible asset with an undefined lifetime must be tested for impairment.

Patents have deadlines until which its take effect in protecting its holder, therefore have a defined expected lifetime, are depreciated. Goodwill usually has an indefinite lifetime and must be tested for impairment every accounting year.

As in tangible assets, intangible assets follow the same logic to distinguish them from costs: costs are presented on the income statement, intangible assets are presented by their net value on the balance sheet.