A liability is an obligation that occurs from owning or utilising intangible assets. It can also refer to a legal or regulatory risk. Intangible assets can become liabilities when they impose costs, legal obligations or financial burdens on a company. For example, if a company owns a patent for a technology that becomes obsolete or infringes upon another patent, the asset can turn into a liability proportionate to resulting legal disputes or the need for costly modifications. Similarly, intangible assets like brand reputation can become liabilities if scandals tarnish the brand’s image, leading to loss of customers or legal ramifications. Another example of an intangible asset turning into a liability would be if it has a finite useful life.
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