The financial accounting term intangible asset is used to describe those assets that lack physical structure (they cannot be seen or measured), and have a high degree of uncertainty surrounding future benefits to be derived from them. The most common types of intangible assets appearing on the balance sheet are goodwill, copyrights, trademarks, patents, franchises, and organization costs.
The value of purchased intangible assets is recorded on the balance sheet at their original cost. In the same way depreciation is used for assets, amortization is used to account for the expiration in an intangible asset's value, which is difficult to determine because:
Generally, intangible assets fall into two categories: