What type of assets might trademarks and patents represent?

Trademarks and patents are classified as intangible assets because they represent non-physical items that have value. Intangible assets are identifiable non-monetary assets without physical substance, which are essential for a company's competitive edge and can include intellectual property like patents that protect inventions, and trademarks that protect brand names and logos. Unlike physical assets such as machinery or buildings, or current assets like cash and inventory, intangible assets do not have a physical presence but still hold significant value for the business in terms of brand recognition, legal rights, and potential revenue generation. Therefore, recognizing trademarks and patents as intangible assets aligns with accounting principles that categorize assets based on their characteristics and the nature of benefits they provide to the business.