Intangible asset
An intangible asset is a non-physical resource controlled by a business, expected to generate future economic benefits, such as a patent, brand or software licence; it is carried at cost and amortised if its useful life is finite.
See it move
A patent with a five-year life is amortised systematically each period, spreading its cost like depreciation. A brand name with no foreseeable end is not amortised at all; instead it is tested for impairment at least annually. Only purchased intangibles are recognised — internally generated brands and customer lists are expensed as incurred.
Check yourself
A company acquires a patent for €60,000. The patent has a legal life of ten years, after which competitors may use the design freely. Under accrual accounting, what is the correct treatment over the patent's life?