What classifies a transaction as an intangible asset?

A transaction is classified as an intangible asset primarily because it provides potential economic benefits to the entity that holds it. Intangible assets are non-physical assets that can help generate revenue or improve the overall value of a business. These include items such as patents, trademarks, copyrights, and goodwill, all of which can yield future economic returns. Their value is not derived from a physical presence, unlike tangible assets such as machinery or real estate.

While having a fixed term or being easily sold may apply to certain intangible assets, they are not defining characteristics of what makes an asset intangible. The essence of an intangible asset lies in the economic advantages and future earnings potential it offers, which distinguishes it from tangible assets or other classes of assets in accounting.