https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
324
INTANGIBLE ASSETS AS THE CORNERSTONE OF TECH INDUSTRY GROWTH
AND INNOVATION
Akhmetova Nasiba Akhmetovna
Tashkent State University of Economics
Accounting faculty student
Abstract:
With an emphasis on technology companies, this article examines the importance of
intangible assets, especially intellectual property (IP). Intellectual property, goodwill, patents,
and trademarks are examples of intangible assets, which are described by IAS 38 as identifiable
non-monetary assets devoid of physical substance. These assets are essential for long-term
economic performance. A thorough discussion of IP's function in the technology industry is
given, emphasizing how it can lead to market dominance and competitive advantages. The
review of the literature sheds light on how intangible assets affect financial performance.
Research indicates that higher R&D and technology-related asset investments have a positive
impact on important financial metrics like return on equity (ROE), return on assets (ROA), return
on invested capital (ROIC), net profit margin, and asset turnover (ATO). With a focus on the
growth of brand value and the strategic significance of intellectual property for digital companies
like Apple, Google, and Microsoft, the article goes into additional detail about the intangible
assets' increasing market worth over time. An examination of businesses' increasing reliance on
intangible assets as a source of value and financial leverage is presented in the paper's conclusion.
Key words:
Intangible assets, IAS 38, intellectual property, technology, ROE, ROA, ROIC,
digital transformation, intellectual property rights, IP management.
Introduction:
Buildings and office furniture are examples of tangible assets, which are different from
intangible assets. Goodwill, intellectual property, and patents are examples of intangible assets
for firms. Intangible assets can appreciate in value over time and are typically seen as long-term
investments. For a business to succeed in the long run, an intangible asset like a brand name can
be essential. Intangible assets can be produced or purchased by businesses. For instance, a
business might establish a patent or start a mailing list of customers. It can deduct the costs of the
procedure, including paying for a lawyer, submitting the patent application, and other associated
charges. Many businesses are unaware that their designs, trademarks, and other intangible
property rights and assets are frequently worth more than their inventories, for instance. A
company's intangible assets are frequently its most valuable asset and can be leveraged to secure
funding for the expansion of the business.
For example, a valuation may become necessary when:
You intend to license out an intangible asset and would need to predict the future license
fees.
You intend to purchase or sell a company. A better price can subsequently be obtained
https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
325
with
the
use
of
an
intangible
asset
value.
Your intangible assets can be valued using a variety of techniques, including the cost method,
market value method, income method, and economic benefit approach. Finding a technique that
is universal and effective in every circumstance is challenging because every approach has pros
and cons. It is up to you to determine which approach works best for your business. There are
companies in the market that offer valuation services and can guide you in obtaining the most
trustworthy appraisal available.
The definition of an intangible asset is "an identifiable non-monetary asset without physical
substance" (IASB standard 38). The usual definition of an asset, which is a historical occurrence
that created a resource that the entity owns and from which future economic benefits are
expected to flow, is supplemented by this definition. Accordingly, IAS 38 adds identifiability as
a condition for an intangible asset, stating that it must be derived from a contractual or legal right
or be detachable from the entity. If an intangible asset meets the recognition criteria—which
include being identifiable (fitting the definition of an intangible asset), controlled by the
company, likely to generate future economic benefits, and having a reliable estimate of its
value—it is recognized. The costs are included in the financial result as period expenses if they
don't meet the recognized criteria.
The Role of Intellectual Property (IP) in Tech:
For tech companies, intellectual property (IP) is essential since it gives their discoveries legal
protection and a competitive advantage. By protecting distinctive goods, software, algorithms,
and brand identities, patents, copyrights, and trademarks enable businesses to profit from their
innovations and preserve their market leadership. For instance, Apple has a dominant market
position because to its vast patent portfolio, which safeguards its technological advancements
and design breakthroughs, like the touch-screen interface of the iPhone. In addition to
guaranteeing a better customer experience, Google's unique algorithms, such as its search engine
algorithm, also significantly raise the bar for rivals to enter the market. In a similar vein,
Microsoft makes money from software licenses for products like Office and Windows while
preventing illegal usage of its software. These intellectual property assets serve as more than
simply legal instruments; they are the cornerstone upon which IT firms erect and grow their
market dominance.
Literature review
:
DA Siddiqui, MJ Qureshi states that R&D expenditures are considered assets or investments.
This option will affect financial performance, but because it increases the knowledge asymmetry
between managers and shareholders, the effect is hard to predict. The hypothesis developed from
this literature review is supported by Canibano, Garcia-Ayuso, and Sanchez (2000) and Lantz et
al. (2005), which demonstrate the existence of enhanced returns due to greater spending on
research and development. The technological company's financial performance is directly
improved by intangible assets. The impact of intangible assets on ROE is substantial. ROA is
significantly impacted by intangible assets. ROIC is significantly impacted by intangible assets.
The impact of intangible assets on Net Profit is substantial.
According to Reilly, technology intangible assets are broadly defined as intangible assets that
create proprietary knowledge and processes for the debtor company. This proprietary knowledge
or process may be either developed or purchased by the debtor owner/ operator. The following
intangible assets are typically included in this category: patents, patent applications, patentable
inventions, trade secrets, know-how, proprietary processes, confidential information and
copyrights on technical materials.
The study by Lefebvre, L. A., Lefebvre, E., & Harvey, J. examines the connection between
https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
326
enhanced adoption of advanced manufacturing technology (AMT) in 116 small manufacturing
enterprises and intangible assets. The findings show that the most powerful factors influencing
later stages of adoption are the technical proficiency of blue-collar workers, the impact of clients
and suppliers, and strategic incentives centered on client and process development.
C. Forero-Pineda, this report explores relevant arguments and identifies some implications on
developing nations of the worldwide trend toward increased protection of intellectual property
rights. Important areas of effect include pharmaceutics, biodiversity, and ethnic knowledge.
Although "trade-relating" intellectual property may make it possible to compensate developing
nations, it appears that lawmakers will not be able to create incentives for the best possible
remuneration. Because it takes a lot of work to get normal scientific results, scientific
communities in underdeveloped nations are especially vulnerable to restrictions on collaboration
and information access brought about by stricter intellectual property rights protection.
Methodology:
As was already noted, these articles comprise a variety of factors, such as ROA, ROE, ROIC,
ATO, and others. Let's talk about what these factors mean. The first is return on assets (ROA),
which measures a company's profitability in relation to its total assets. A manager, investor, or
analyst can determine how well a company's management uses its assets to produce earnings by
looking at ROA. Return on equity, which is a metric of financial success determined by dividing
net income by shareholders' equity, comes next. ROE could be viewed as the return on net assets
since shareholders' equity is calculated as the sum of a company's assets less its debt. A
profitability or performance ratio called return on invested capital seeks to quantify the
percentage return that investors in a business are receiving on their capital. Additionally, it shows
the remaining worth of assets less obligations. The next is Assets Turnover, a financial ratio that
assesses how well a business uses its assets to produce sales income or revenue. The final one is
the debt-to-equity ratio, which is computed by dividing the total liabilities of a business by the
equity held by its shareholders. The balance sheet of a business's financial statements contains
these figures. The ratio is employed to assess the financial leverage of a business.
Analysis:
The analysis of this article will be started with Figure 1, which describes the investment rate by
type of asset as percentage. As it is visible from the graph, in 1977 it was not common to use
intangible assets within the company, while the indicator for tangible asset accounted for 15%.
By 1990, the difference between two indicators narrowed year by year. And at the end of the
period, tangible and intangible assets exchanged their places, and accounted for 9.5% and 14.3%
respectively.
Figure 1. Investment Rate by type of Asset Percentage
This shift to digital has introduced new business models and monetization strategies. This has
https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
327
created new revenue streams, information sharing possibilities, efficiency and productivity gains,
and subsequently enhanced profitability and market penetration. Customers have in turn
benefited through an increased emphasis on improved customer service and accountability
towards satisfaction with goods and services.
Figure 2, explains information on market value of intangible assets. As we can see from the
graph, the market value of intellectual property increased gradually between the years of 1975
and 2015. In short words, the rate of market value of intangible assets increased by $ 19,21 trn
within 43 years. To conclude, the main point form the graph is this, intellectual property is
getting more and more common for companies to use for their benefit.
Figure 2. Market value of Intangible Assets
https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
328
Figure 3. Brand values of companies
As stated above, brand value is also an example of intangible assets, and it is an important part of
popular companies. Figure 3 shows the value of brands of companies, like apple, google,
Microsoft and others. According to the graph, Apple owns the highest amount of brand value,
accounting for almost 250 billion dollars, while the figure for McDonald’s takes the 10
th
place on
the graph, with 50 billion dollars. The indicators for Louis Vuitton, Samsung, Disney, Coca-Cola
and Facebook accounts up to 100 billion dollars. Other companies, Amazon, Microsoft and
Google made up maximum 200 billion dollars on the graph. From the information provided from
the graph, we can conclude that intangible assets play a crucial role within the company, and
they have their own value.
Conclusion:
To conclude, particularly in the technology industry, intangible assets, intellectual property have
emerged as a key factor in company success. Prominent IT businesses' case studies illustrate how
strategic IP management and protection may boost long-term profitability and offer substantial
competitive advantages. The market value increase and brand valuations of firms such as Apple
and Google demonstrate the evolution of intangible assets and highlight their growing
significance in today's business environment. The study also demonstrates how intangible assets
contribute to a company's improved financial success by directly influencing important financial
metrics like ROE, ROA, and ROIC. As businesses continue to embrace digital transformation,
the value of intangible assets will likely increase, making it essential for firms to accurately
assess, manage, and leverage their IP to maintain a competitive edge.
References:
1.
Qureshi, M. J., & Siddiqui, D. A. (2020). The effect of intangible assets on financial
performance, financial policies, and market value of technology firms: a global comparative
analysis.
Asian Journal of Finance & Accounting
,
12
(1), 26-57.
2.
Reilly, R. F. (2015). Technology Intangible Assets.
American Bankruptcy Institute
Journal
,
34
(10), 38.
3.
Lefebvre, L. A., Lefebvre, E., & Harvey, J. (1996). Intangible assets as determinants of
https://ijmri.de/index.php/jmsi
volume 4, issue 3, 2025
329
advanced manufacturing technology adoption in SME's: toward an evolutionary model.
IEEE
Transactions on Engineering management
,
43
(3), 307-322.
4.
Li, H., & Wang, W. (2014). Impact of intangible assets on profitability of Hong Kong
listed information technology companies.
Business and Economic Research
,
4
(2), 98.
5.
Brynjolfsson, E., & Hitt, L. (2005). Intangible assets and the economic impact of
computers.
Transforming enterprise: The economic and social implications of information
technology
, 27-48.
6.
Forero-Pineda, C. (2006). The impact of stronger intellectual property rights on science
and technology in developing countries.
Research Policy
,
35
(6), 808-824.
7.
Rai, A. K. (1999). Intellectual property rights in biotechnology: Addressing new
technology.
Wake Forest L. Rev.
,
34
, 827.
8.
Falvey, R. E., Foster, N., & Memedovic, O. (2006).
The role of intellectual property
rights in technology transfer and economic growth: theory and evidence
. Geneva: UNIDO.
