What kind of asset would include patents and trademarks?

The correct answer is intangible assets because patents and trademarks are classified as such due to their non-physical nature. Intangible assets represent long-term resources that provide value to a business but do not have a physical presence. Instead of being tangible items like machinery or buildings, patents and trademarks are legal rights that grant the holder exclusive use or ownership, which can help generate revenue.

Understanding this classification is important in financial reporting, as it impacts asset valuation on the balance sheet and can influence investment decisions. While fixed assets refer to tangible physical items used in business operations like equipment and property, and current assets are those expected to be converted into cash or used up within one year, intangible assets occupy a unique category reflecting non-physical resources. Operating assets typically encompass both tangible and intangible resources actively used in the company’s operations but do not specifically focus on the unique nature of intangible assets like patents and trademarks.