Intangible fixed assets are long-term assets that assist the company in expanding and profiting. These can include patents, trademarks, goodwill, and software. Those assets come without a physical form, like properties or machinery. But very much these are important for business success. Intangible Fixed Assets are fixed assets that you can’t see or touch. They remain in the company for more than one year. They provide the company with decades-long advantages. To ensure market resilience, numerous organisations invest in these assets. People often comes up for an answer to the question “does fixed assets include intangible assets?”. The answer is yes. There are two types of fixed assets tangible and intangible. That’s how tangible fixed assets and intangible fixed assets bring a business to a stage of growth. More specifically, software companies may not have large machines. Its principal tools, however, are its software and licenses.

Meaning of Intangible Fixed Assets

Intangible fixed assets are long-term assets without a physical form. They are intangible, but they carry great value for companies. The company’s business activities are focused on these assets.

What Makes an Asset as “Intangible”?

An asset is considered intangible when it lacks physical manifestation but has inherent value. It is neither visible nor tangible, but enables the business to generate revenues or remain competitive. There are a few prominent features to guide you in identifying whether an asset is intangible:

• It cannot be stapled; it has no physical form.
• Its benefits remains for the business for more than one year.
• It is owned or controlled by the company.
• It aids in business operations or brand lift.

Intangible fixed assets include the following, among others:

• Copyrights
• Trademarks
• Patents
• Licenses
• Software
• Brand goodwill

Therefore, when it comes to the question “Is an intangible asset a form of fixed asset?” you now know the answer. Yes, as it is a long-term asset with no physical substance used in business operations.

Types and Examples of Intangible Fixed Assets

Different forms of intangible fixed assets provide a variety of different values to a business. These assets safeguard concepts, enhance brand worth, and facilitate day-to-day work. They’re hard to hold in your hands, yet can be as powerful for long-term gain. Let us understand the different types using real examples. Intangible fixed assets include a variety of types. Both have their part to play in business. So, let’s review them one by one.

• Patents: Patents are issued for inventions or for products. It grants a company the right to make and sell that product for years. This comes with money and market power.
• Trademarks: Trademarks are the symbols, logos, or words that represent an identity of a company. It builds trust among customers a solid trademark.
• Copyrights: These are rights of creative works including books, music, and videos. That content can only be accessed or sold by the owner.
• Software: Nowadays, businesses purchase or custom-build software. This software is used to work on daily tasks and manage customers.
• Goodwill: Goodwill means so a lot in terms of a business. It is a transaction of when one company purchases another.

Type	Example
Patents	Drug formula, machine design
Trademarks	Logos, brand names
Copyrights	Books, music, films
Software	CRM tools, ERPs
Goodwill	Brand value from acquisition

Now you can answer easily: “what are intangible fixed assets?”

Intangible Fixed Assets in the Balance Sheet

The hidden value of a company’s non-physical resources is reflected in intangible fixed assets on the balance sheet. These assets are shown in non-current or fixed assets and demonstrate their long-term role in the business’s success. Now, let us look at how companies represent intangible fixed assets in balance sheets.

How are They Shown?

Intangible fixed assets are typically distinguished in the non-current assets or fixed assets section. Companies simply mention the name of the asset along with the value. Over the years they reduce the value through amortisation.

Amortisation is the same as depreciation, only it applies to intangibles. It amortizes the cost of the asset over its useful life. For instance, if a software license is valid for 5 years, then the cost is amortized over 5 years.

Balance Sheet Sample Format:

Assets	Amount (₹)
Non-Current Assets   a. Tangible Fixed Assets   b. Intangible Fixed Assets            – Software            -Patent	10,00,000 1,00,0002,50,000

From the above, the derive we can clearly come to the point  intangible fixed assets in balance sheet is the answer. They are as essential as buildings or machines.

Difference Between Tangible Fixed Assets vs Intangible Fixed Assets

By knowing the difference between tangible and intangible fixed assets, you can do better financial planning. Both are considered fixed assets, yet one is tangible while the other is not. Each plays a unique but pivotal role. This is one of the most asked questions for commerce students in India. Let us break it down.

Basis	Tangible Fixed Assets	Intangible Fixed Assets
Physical presence	Yes	No
Examples	Machines, land	Patents, software
Depreciation/Amortisation	Depreciation	Amortisation
Can be touched	Yes	No
Shown in balance sheet	Yes	Yes

One thing we can say that both i.e fixed assets tangible and intangible fixed assets help the company. Both are important. One does not go without the other. So, we get to the question, are “intangible assets fixed or current? has a clear answer. They are fixed assets. They remain in the business for decades.

Importance of the Intangible Fixed Assets in Modern Business

The 21st century economy is one that is dedicated to ideas and knowledge workers. Not buildings or factories. In the current digital and knowledge-based economy, intangible fixed assets are critical to business success. These assets power innovation, create brand value and enable companies to scale without physical resources.

Why Intangible Fixed Assets are Important?

Consider companies like Infosys, TCS, or Zomato. They’re valuable because of software, apps and brand name. They are considered intangible fixed assets, so it must be understood:

• They confer legal rights to the company.
• They allow businesses to distinguish themselves from their competition.
• They provide future returns in the form of new customers or higher prices.
• They drive business growth with reduced expense.
  

Relevance to ACCA Syllabus

Intangible fixed assets are dealt with under IAS 38 in both the Financial Reporting (FR) and Strategic Business Reporting (SBR) papers. The students of ACCA must know about recognition, measurement, amortisation and disclosure of intangible assets under international standards.

Intangible Fixed Assets ACCA Questions

Q1. Which of the following is excluded from definition of intangible fixed asset under IAS 38?

A. Patent

B. Trademark

C. Inventory

D. Software

Answer: C Inventory

Q2. It is only under IAS 38 which of the following must immediately be expensed instead of capitalized?

A. Internal-use software development costs

B. Research costs

C. Cost of acquiring a patent

D. Paid 3 years license fee

Answer: B. The cost of research

Q3. Which of the following statements about amortisation of intangible fixed assets are true?

A. Not needed for finite life assets

B. Amortisation is a cost of revenue

C. It distributes the cost of an asset over its useful life

D. Only intangible assets are amortised

Answer: C. It spreads the asset cost over its useful life

Q4. Goodwill, as it appears on financial statements.

A. A liability account

B. A tangible asset

C. An indefinite-life intangible asset recognized as a result of a business combination

D. An item shown under equity

Answer:  C. An intangible asset acquired through business combinations

Q5. What test is required that has to be performed each year for assets that are not physical and that has no limit on how long it will keep?

A. Depreciation test

B. Liquidity test

C. Impairment test

D. Revaluation test

Answer: C. Impairment test

Relevance to US CMA Syllabus

In CMA Part 1: Financial Reporting, Planning, Performance and Control, they include the subject “intangible fixed assets” as a part of Financial Reporting. Management decision making and planning fundamentally relies on understanding valuation, recognition and amortisation.

Intangible Fixed Assets US CMA Questions

Q1. Which of the following is a component of an intangible fixed asset?

A. Equipment

B. Land

C. Trademark

D. Inventory

Answer: C. Trademark

Q2. An intangible asset’s useful life is applied as part of determining:

A. Salvage value

B. Depreciation rate

C. Amortisation schedule

D. Market value

Answer: C. Amortisation schedule

Q3. For amortisation of intangible assets, which of the following is TRUE?

A. It increases net income

B. It has no impact on profit

C. It is recognized in the income statement

D. It is added to asset value

Answer: C. It is charged to the income statement

Q4. Software purchased for internal use should be:

A. Expensed immediately

B. Recorded as goodwill

C. Capitalised and amortised

D. Treated as a liability

Answer: C. Capitalised and amortised

Q5. What accounting concept must a company follow when it is capitalising intangible fixed assets?

A. Matching principle

B. Revenue recognition

C. Going concern

D. Entity concept

Answer: A. Matching principle

Relevance to US CPA Syllabus

FAR (Financial Accounting and Reporting): CPA candidates learn about intangible fixed assets under US GAAP and IFRS— acquisition, amortisation, impairment and disclosure.

Intangible Fixed Assets US CPA Questions

Q1. Goodwill is subject to the test for impairment, under US GAAP:

A. Monthly

B. The event that triggers the event

C. Never

D. Every quarter

Answer: B. If a triggering event occurs

Q2. Goodwill generated internally is:

A. Capitalised

B. Recognised over time

C. Not recognised

D. Recorded at cost

Answer: C. Not recognised

Q3. What is one identifiable intangible asset from above?

A. Goodwill generated internally

B. Business reputation

C. Franchise agreement

D. Customer loyalty

Answer: C. Franchise agreement

Q4. You do not need to amortise:

A. Patent

B. Trademark for a decade

C. Goodwill

D. Copyright

Answer: C. Goodwill

Q5. If an intangible asset is impaired, the carrying amount is:

A. Increased

B. Reduced to zero

C. Reduced to its fair value

D. Left unchanged

Answer: C. Depreciated to its fair value

Relevance to CFA Syllabus

First, in Level I and II – Financial Reporting and Analysis, CFA candidates learn about the impact of intangible fixed assets on financial statements, valuation and ratios. An awareness of amortisation and impairment is vital for equity valuation and investment analysis.

Intangible Fixed Assets CFA Questions

Q1. Intangible fixed assets are significant in financial analysis because they:

A. Show short-term liquidity

B. Affect earnings quality

C. Have no impact on ratios

D. Are always written off

Answer: b. Affect quality of earnings

Q2. When intangible assets are capitalised, this makes the balance sheet look more optimal.

A. Increases expenses

B. Increases total assets

C. Reduces equity

D. No effect on net income

Answer: B. Increase total assets

Q3. There are a few restrictions regarding the treatment of research costs under IFRS:

A. Capitalised always

B. Deferred until future use

C. Expensed when incurred

D. Treated as current assets

Answer: C. Expensed when incurred

Q4. Amortisation of intangible assets includes

A. Equity

B. Gross profit

C. Net income

D. Sales

Answer: C. Net Income

Q5. What financial ratio is most sensitive to the treatment of intangible assets?

A. Current ratio

B. Interest coverage

C. Asset turnover

D. Return on assets (ROA)

Answer: D. Return on assets (ROA)