Question

1. What are intangible assets providing examples of them and how they are reflected in the financial statements?

2. How is the value of intangible assets determined and do they decrease in value over time as other assets or do they maintain their value?

Answer 1

1)

a)Intangible assets are long-term assets that typically lack a physical presence and have an unknown amount of future value .

b)Intangible assets are typically intellectual assets the benefit the company over several accounting periods

c)Examples of intangible assets includes goodwill , patents , trademarks, copyrights etc.

d)Intangible assets are listed on a company's balance sheet only if they are acquired assets and assets with an identifiable value and useful lifespan that can thus be amortized. Internally generated intangibles are not recognized with a value in balance sheet. When we amortized intangible assets , the amortized amount should be debited in profit and loss account as an expense.

2)

a)Trademarks have enormous value to businesses, although that may not translate to a business’s financial report.

b)A business can only value any intangible asset, including a trademark, based on what it cost to acquire.

c)Some intangible assets are amortized over time. This means that the value decreases every year as an expense for using the item. The amount the value of the asset decreases also decreases the business’s income for that year. Trademarks are not amortized since each is considered to have an indefinite life, meaning a perception exists that a trademark can retain its value forever.