What is intangible asset
Companies always have different kinds of assets, such as buildings and machines, but they also have some other assets like brand names, research and development, copyrights or patents. These assets contain three essential characteristics: they are assets, they lack physical substance and they are identifiable non-monetary. This kind of asset is called intangible asset. It can be recognized if it can meet these four criteria: it is separately identifiable, controlled by the enterprise, the expected future economic benefits will flow to the entity and the cost of the assets can be measured reliably. The fair value and validity of the intangible assets and the supply and demand in intangible assets market must be
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In addition, the difference in the process of creating value between intangible assets and tangible assets are vague. There is interaction between intangible and tangible assets, which make it difficult to measure accurately to what extent the benefits is made by intangible assets. For example, if a company spends money training its staff, the object is to improve future benefits. However, the improvement is uncertain because the staff may not learn very well or the ability they learn cannot help the company making profit. What is worse, the staff may leave in the future but the company had spent money on training. Similarly, advertising is done for sales but the long-term effect is always uncertain.
Secondly, the useful life of an intangible asset can be finite and indefinite. The useful life of intangible assets is often associated with the future expected cash flow of the assets. According to IAS 38, an intangible asset usually be regard as having an indefinite useful life. However, nowadays, as the science and technology is becoming developed, the time of replace an intangible asset becoming shorter, the emergence of the substitutes pose a threat on this intangible asset and there is no doubt that this intangible asset will depreciate rapidly. According to the annual report and financial statements of M&S, “definite life intangibles are amortised on a straight-line basis over their estimated useful lives. Indefinite life
Samuelson believes that the assets definition should concentrate upon property rights that are concerned with wealth, which provides a true balance sheet orientation, rather than being concerned with revenue generation, Samuelson’s definition may lead to an exit value orientation for assets. One of the key points about the property rights approach lies in exchangeability of the asset. Samuelson’s viewpoint would result in certain deferred charges being expensed immediately even though their incurrence may bring about future economic benefits.
Assets are things that a company owns that have value. This typically means they can either be sold or used by the company to make products or provide services that can be sold. Assets include physical property, such as plants, trucks, equipment and inventory. It also includes things that can’t be touched but nevertheless exist and have value, such as
In 2010, Bust-a-Knee paid MD International $15 million cash in exchange for its 100 percent ownership. A $15 million credit to the cash account indicates that Bust-a-Knee paid MD International that amount of cash at the date of transfer of the ownership. Ownership is treated as an intangible asset in this case. Intangible assets are non-physical assets that are acquired from others or developed internally by a company. Assets are the probable future economic benefits controlled by the company from past events or transactions. Intangible assets have similar characteristics with assets. Bust-a-Knee has control over MD International since equity had been transferred and will gain future economic profits because there are two in-process
Assets are to be recorded and valued based of the type of asset there are.
A finite life is when an intangible asset has a limited existence. It can be worn out or used up after a certain period of time. An intangible that has a finite useful life is amortized over that useful life. The amortized amount is recorded as a cost
Answer: The difference between the company’s market value and book value is a factor of the intangible assets like brand value, human capital, customer satisfaction and loyalty. These intangible assets become the factor of production providing future growth. Microsoft’s accounting policies had a negative impact on the book value of the company.
Intangible assets are one of the most significant items in Myers financial statement. It consists of goodwill, brand names and trademarks, software and leases. AASB 136 Impairment of Assets requires Goodwill and some of the brand names that are indefinite useful life to test for the impairment. In Myer, there is no impairment loss. Furthermore, the accumulated amortisations of the other intangible assets are shown in the table X have a total value of $73585 thousand. According to AASB 117 Leases, the total rentals leases over the leases term are being expensed on a straight-line basis. In contrast, Myer’s competitor David Jones has only two intangible assets goodwill and software. The accumulated amortisation for software is $28808 thousand which is shown in the table X and it is the total value of accumulated amortisation.
Based on SFAS No.142 states goodwill and intangible assets that have indefinite useful life will not be
The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within
The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate
In general, intangible assets are assets that are not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace.
A company’s resources include two types: tangible and intangible. The former is asset that can be observed and counted, such as, office furniture, production equipment, computer, and warehouse, etc. Unlikely, the intangible resources are assets that are rooted deeply in the company’s history, accumulate over time, and are relatively difficult for competitors to learn and copy, such as brand, intellectual property and reputation, etc.
The intangible asset will generate probable future economic benefits for the organization which can either be in the form of costs reduction or in the form of increasing revenue in the future for the organization.
One of these is with regards to goodwill and intangible assets with identifiable useful lives.
The pace at which hardware, software and networks are developing allows considerable growth and value creation. The digitalisation of existing assets and the creation of new kinds of intangible assets are accompanied by an unprecedented diffusion of knowledge and increasing interconnectedness. The rapid technological progress which characterizes the digital economy has also led to emerging trends and new ways of ‘doing