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An intangible asset is an asset that lacks physical substance (unlike physical assets such as machinery and buildings) and usually is very hard to evaluate. It includes patents, copyrights, franchises, goodwill, trademarks, and trade names, and the general interpretation also includes software and other intangible computer based assets. Contrary to other assets, intangible assets generally—though not necessarily—suffer from typical market failures of non-rivalry and non-excludability. 
Intangible assets have been argued to be one possible contributor to the disparity between company value as per their accounting records, and company value as per their market capitalization.  Considering this argument, it is important to understand what an intangible asset truly is in the eyes of an accountant. A number of attempts have been made to define intangible assets:
- Prior to 2005 the Australian Accounting Standards Board issued the Statement of Accounting Concepts number 4 (SAC 4).  This statement did not provide a formal definition of an intangible asset but did provide that tangibility was not an essential characteristic of asset.
- International Accounting Standards Board standard 38 (IAS 38)  defines an intangible asset as: "an identifiable non-monetary asset without physical substance." This definition is in addition to the standard definition of an asset which requires a past event that has given rise to a resource that the entity controls and from which future economic benefits are expected to flow. Thus, the extra requirement for an intangible asset under IAS 38 is identifiability. This criterion requires that an intangible asset is separable from the entity or that it arises from a contractual or legal right.
- The Financial Accounting Standards Board Accounting Standard Codification 350 (ASC 350) defines an intangible asset as an asset, other than a financial asset, that lacks physical substance.
The lack of physical substance would therefore seem to be a defining characteristic of an intangible asset. Both the IASB and FASB definitions specifically preclude monetary assets in their definition of an intangible asset. This is necessary in order to avoid the classification of items such as accounts receivable, derivatives and cash in the bank as an intangible asset. IAS 38 contains examples of intangible assets, including: computer software, copyright and patents.
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R&D is considered as one among several other intangible assets (e.g., about 16 percent of all intangible assets in the US ), even if most countries treat R&D as current expenses for both legal and tax purposes. While most countries report some intangibles in their National Income and Product Accounts (NIPA), no country has included a comprehensive measure of intangible assets. Yet, economists recognize the growing contribution of intangible assets in long-term GDP growth. 
IAS 38 requires any project that results in the generation of a resource to the entity be classified into two phases: a research phase, and a development phase.
Research is defined as "the original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. For example, a company can carry a research on one of its products which it will use in the entity of which results in future economic income.
Development is defined as "the application of research findings to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems, or services, before the start of commercial production or use."
The accounting treatment of such expenses depends on whether it is classified as research or development. Where the distinction cannot be made, IAS 38 requires that the entire project be treated as research and expensed through the Statement of Comprehensive Income.
As research expenditure is highly speculative, there is no certainty that future economic benefits will flow to the entity. As such, prudence dictates that research expenditure be expensed through the Statement of Comprehensive Income. Development expenditure, however, is less speculative and it becomes possible to predict the future economic benefits that will flow to the entity. The matching concept dictates that development expenditure be capitalised as the expenditure will generate future economic benefit to the entity.
The classification of research and development expenditure can be highly subjective, and it is important to note that organisations may have an ulterior motive in its classification of research and development expenditure. Less scrupulous directors may manipulate financial statements through their classification of research and development expenditure.[ citation needed]
The International Accounting Standards Board (IASB) offers some guidance (IAS 38) as to how intangible assets should be accounted for in financial statements. In general, legal intangibles that are developed internally are not recognized and legal intangibles that are purchased from third parties are recognized. Wordings are similar to IAS 9.
Intangible assets are typically expensed according to their respective life expectancy.  Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life,  whichever is shorter. Examples of intangible assets with identifiable useful lives include copyrights and patents. Intangible assets with indefinite useful lives are reassessed each year for impairment. If an impairment has occurred, then a loss must be recognized. An impairment loss is determined by subtracting the asset's fair value from the asset's book/carrying value. Trademarks and goodwill are examples of intangible assets with indefinite useful lives. Goodwill has to be tested for impairment rather than amortized. If impaired, goodwill is reduced and loss is recognized in the Income statement.
For personal income tax purposes, some costs with respect to intangible assets must be capitalized rather than treated as deductible expenses. Treasury regulations generally require capitalization of costs associated with acquiring, creating, or enhancing intangible assets.  For example, an amount paid to obtain a trademark must be capitalized. Certain amounts paid to facilitate these transactions are also capitalized. Some types of intangible assets are categorized based on whether the asset is acquired from another party or created by the taxpayer. The regulations contain many provisions intended to make it easier to determine when capitalization is required. 
Given the growing importance of intangible assets as a source of economic growth and tax revenue,  as well as the fact that their non-physical nature makes it easier for taxpayers to engage in tax strategies such as income-shifting or transfer pricing,  tax authorities and international organizations have been designing ways to link intangible assets to the place where they were created, hence defining nexus. Intangibles for corporations are amortized over a 15-year period, equivalent to 180 months.
Definition of "intangibles" differs from standard accounting, in some US state governments. These governments may refer to stocks and bonds as "intangibles. " 
- Cognitive assets
- Intellectual capital
- Intellectual property
- Goodwill (accounting)
- Tangible common equity
- Tangible property
- Webster, Elisabeth; Jensen, Paul H. (2006). Investment in Intangible Capital: An Enterprise Perspective. The Economic Record, Vol. 82, No. 256, March, 82-96.
- Lev, Baruch; Daum, Juergen (2004). "The dominance of intangible assets: consequences for enterprise management and corporate reporting" (PDF). Measuring Business Excellence. 8 (1): 6–17. doi: 10.1108/13683040410524694.
- "SAC 4: Definition and Recognition of the Elements of Financial Statements" (PDF). Australian Accounting Standards Board. Retrieved 19 December 2012.
- "IAS 38". International Accounting Standards Board. Retrieved 19 December 2012.
- Bureau of Economic Analysis (2013). Preview of the 2013 Comprehensive Revision of the National Income and Product Accounts. https://www.bea.gov/scb/pdf/2013/03%20March/0313_nipa_comprehensive_revision_preview.pdf
- Corrado, Carol. Charles Hulten, and Daniel Sichel (2006). Intangible Capital and Economic Growth. Federal Reserve Board Discussion Paper N. 2006-24. April. http://www.federalreserve.gov/pubs/feds/2006/200624/200624pap.pdf
- For international legal lives by class of intangible asset, see the table in Tax amortization lives of intangible assets
- Treas. Reg. § 1.263(a)-4.
- Donaldson, Samuel A. Federal Income Taxation Of Individuals: Cases, Problems and Materials (2nd ed.). St. Paul: Thomson West, 2007. pg. 200.
- "Action Plan on Base Erosion and Profit Shifting." (2013) Organisation for Economic Co-operation and Development (OECD). http://www.oecd.org/sti/inno/46349020.pdf
- Florida Intangible Tax