INTANGIBLE ASSSETS

An intangible asset is a business asset which has no material substance. It can be found in all areas of a
business and have a long term nature. They are assets used in the operation of the business, they
contribute to the production or operating cycle of a business.

It includes;

 Technology, like technical manuals, engineering processes, computer software.

 Customer relationships, including goodwill.
 Contracts, franchise, licenses, and permits.
 Trained and competent workers.
 Some intangible assets are intellectual property.
 Trade secrets, brand recognition, and proprietary business processes.
 Marketing and advertising campaigns and materials.
 Location-related assets like land, water, and mineral rights.

Characteristics of Intangible Assets

 Non-current, Non-monetary assets.

 No physical substance
 They are beneficial to the firm for many accounting periods.
 They are valued at cost.
 The cost of assets consumed is systematically allocated to the periods in which revenues are
earned by using those assets.

Reasons to Analyze Engineering Intangible Assets

Fair value accounting

• Application of acquisition accounting provision and assets value impairment testing

provisions of generally accepted accounting principles or GAAP

Federal income tax accounting

• Including the purchase price allocation of a taxable acquisitions

• Measurement of charitable contribution deduction

State and local property tax

 • Valuation of intangible assets that are exempt from the ad valorem property taxation of real
estate and tangible personal property

Bankruptcy

• Analysis of debt

• Testing of creditor’s collateral value

Types of Engineering Intangible Assets

• Construction Engineering Drawings

• Product Engineering Documents

• Process Engineering Documents

• Engineering Manuals and Procedures

• Tooling Engineering Documents