Depreciating companies intangible assets Companies intangible assets are something which is not physical e.g. Patents, copyrights etc.
How can we depreciate companies intangible assets and why it is done?
All assets which have a finite useful life are depreciated. For example, your patents or copyright might hold for 5 or 10 years but no more. Thus, it is quite coherent to reflect the loss of value through depreciation and amortization. Same goes for a software for example: in 5 years time, a software might be obsolete, so we need to reflect this in the financial statements.

However, the intangible assets which do not have a finite useful life (e.g. goodwill) will not be depreciated, though its value can be impaired. A great example was provided last summer by Microsoft.

The way it is done is the very same as for tangible assets.

Under IFRS, the relevant IAS is the IAS 38