ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Record Intangible Assets on a Company's Balance Sheet

Updated on June 29, 2012

Introduction to Intangible Assets

Intangible assets are those items that an organization will not be able to touch or see, yet still derive value from it. In accounting terminology, these items incorporate products that deliver rights or privileges to a company. Examples include patents, copyrights, or rights-to-use arrangements with other parties regarding a specific asset. Though an intangible asset may have a piece of paper that exists to describe or detail the item, the document does not really represent the possession itself, at least in terms of the item’s worth or value. Reporting intangible assets is essential for a company, which should record the intangible asset on its balance sheet, under the long-term asset category in most cases.

Steps to Record Intangible Assets

1. Tally the total cost for the intangible asset. This should incorporate the purchase charge for the intangible asset and any associated costs to secure the rights and/or benefits of the asset.

2. Post the total intangible asset cost into the general ledger. Debit an appropriate asset account and credit either an accounts payables or cash account, based on exactly how the business paid for the resource.

3. Make a line on the company’s balance sheet for the intangible asset. Supply a one-line summary of the intangible possession, such as patent, goodwill, or copyright. The account description label may need to match the one line balance sheet description line.

4. Determine annual amortization for the intangible possession. Divide the possession's absolute cost by the number of useful years the asset delivers worth to the company. Review appropriate accounting principle guidelines from authorities to ensure the amortization amount is appropriate.

5. Create a journal entry to post the yearly amortization into to the basic general ledger. Post a debit to an amortization expense and then credit the accumulated amortization account, all in one entry. Accountants can complete this activity on a monthly basis if desired.

6. Report all accumulated amortization straight underneath the intangible asset account on the balance sheet. This is a contra account that decreases the original value of the intangible asset, creating a true carrying value for the intangible item.

Notes & Reminders

Intangible assets can go into one financial account together or grouped by the particular type of intangible asset. As an example, one account may be essential for all patents, with each patent having their an individual amortization estimate.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)