Persistent competitive pressure induced by globalization, deregulation and technological changes have forced the companies to rely on continuous innovations for the survival and growth. Innovation in turn is primarily achieved by the investment of the intangible assets. It is, therefore, hardly surprising that in recent times intangibles have become an important issue of discussion, both in the academic and corporate world.
Baruch Lev, Professor of Accounting and Finance at New York University, defines an intangible asset as "an asset that promises future benefits which are not physical, like property, plant, equipment, stocks and bonds." Thus, intangible asset is an asset that is not physical in nature. Corporate intellectual property (such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company's brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset. On the basis of these definitions, the three important criteria that should be considered to evaluate a non-monetary asset as intangible are |
