 Welcome to Unit 7 of Sailor.org's Introduction to Financial Accounting. This unit is divided into two subunits and will take just about three hours to complete. In the last unit, you learned about tangible assets or items that have a physical presence. There are, however, other types of assets that bring value to a company that are not physical in nature. These assets are commonly called intangible assets. Intangible assets are often very valuable, but cannot be physically held or accessed. A few great examples of intangible assets are copyrights, trademarks, patents or brand names. Even a company's reputation can be considered an intangible asset. To put the concept into non-business terms, if your significant other asks you what qualities you like in him or her, you might say sense of humor or intelligence. You can't physically touch his or her sense of humor, but it's still important to you. You probably value it more than anything else about him or her. This unit will also get into how and why companies seek mergers and acquisitions and why companies purchase other companies for more than their asking price. This practice of paying more for a company than its asking price is referred to as offering goodwill. Goodwill typically covers a company's intangible assets. It's similar to offering a waiter a very generous tip for outstanding service. Giving goodwill is not required, but it is a best practice in business. This amount must of course be recorded in both companies' financial accounting books. In this unit, be sure to focus on the similarities and differences between tangible and intangible assets. You should be able to give concrete examples of both types of assets and feel comfortable with recording tangible and intangible assets according to financial accounting principles. By now, we've covered lots of financial accounting information. In the next few units, you'll begin to apply your knowledge and look into the qualitative conclusions that you can draw from examining a company's financial statements.