Question 3

A) Write A Note On Intangible Assets

Identifiable long-term assets of a company having no physical existence are called

intangible assets. They include goodwill, patents, copyrights, etc.

Intangible assets are either acquired in a business combination or developed internally.

In case of acquisition in a business combination such assets are recorded at their fair
value, while in case of internally generated intangible assets the assets are recognized
at the cost incurred in development phase. In relation to the development of internally
generated intangible assets there are two phases: research phase and development
phase. Research phase includes all activities and costs incurred before the intangible
asset is commercially feasible, while the development phase includes all activities and
costs incurred after the asset is established to be commercially feasible. All costs in
research phase are expensed in the period incurred while costs incurred in
development phase are capitalized.
B) Explain The Types Of Intangible Assets With Examples

TRADEMARKS

FRANCHISES COPYRIGHTS
INTANGIBLE
ASSETS

GOODWILL PATENTS

Trademarks

A trademark is an intangible asset legally preventing others from using a

business's logo, name, or other branding.

A word, symbol, or phrase used to identify a particular company's product and

differentiate it from other companies' products.
As a trademarks are used to identify a specific type of business or service, they
are important for businesses that want to protect their branding.
A trademark's value for accounting purposes equals what it cost to acquire.
Trademarks are not amortized, but if one loses its value, it can be impaired.
Copyrights

A copyright is an amortizable, intangible asset that is used to secure the legal

right to publish a work of authorship.

The right by law to be the entity which determines who may publish, copy and
distribute a piece of writing, music, picture or other work of authorship
A work of authorship can include poetry, novels, computer software, movies,
plays, songs and architectural drawings.
Most copyrights last for the duration of an author's life plus 70 years.
The value of a copyright equals the cost it took to secure the legal copyright on
a work the business created, or the price the business paid to purchase the
copyright from the original owner.

Patent

A patent is an amortizable, intangible asset that grants a business the sole right
to manufacture and sell an invention.

A declaration issued by a government agency declaring someone the inventor of

a new invention and having the privilege of stopping others from making, using or
selling the claimed invention.
There are three types of patents. A utility patent is for processes, machines, and
articles of manufacture. A design patent is used for any new, original ornamental
design that can be affixed to an item of manufacture. A plant patent is granted to
anyone that has invented or created a new plant.
Goodwill

Goodwill is an intangible asset that equals an acquired company's purchase price

minus the value of its net assets when it was acquired

Goodwill is not amortized, but it can be impaired if the present value of the
future revenues of the related business segment are less than the net assets
(including goodwill) of the business segment.
A company may only record goodwill on its balance sheet in connection to a
business or business segment it acquired.
Represents the difference between the firm's total net assets and its market
value; the amount is recorded at time of acquisition.

Franchises and licenses

Franchises and licenses are intangible assets that legally entitle a business to
sell a product or service developed by another entity.

If a franchisee makes periodic payments to the franchisor, it does not record

a franchise asset. If the contract requires that a lump sum be paid up front to
secure the franchise rights for several years, the franchisee would record a
franchise asset on its balance sheet.
The authorization granted by a company to sell or distribute its goods or
services in a certain area.
A holder of a franchise; a person who is granted a franchise.
C) Explain The Characteristics Of Intangible Assets

They are capable of legal enforcement and also of legal transfer of ownership.
They are capable of producing revenues in their own right.
The assets are capable of generating additional resources / cash flows / profits
over and above those which the business would otherwise make if it did not own
the rights in question.
They are often separable from the underlying business.
The asset can be regarded as a capital asset rather than a carryover of recent
expenditure.
D) Briefly Explain How A Companys Goodwill Is Built?

Goodwill is created by doing good business. For vendors, clients and other
stakeholders, they want you to provide good quality/relevant products and
services, be fair and reasonable in actions and deliver on promises.
It's important to recognize that goodwill is earned and bestowed upon a company
by the people who use, make, deliver, enjoy the company's products and
services. Goodwill is one of those soft assets that translates into an improved
reputation and brand, improved loyalty with customers and improved hiring and
retention of employees and perhaps the bottom line.
Beyond that, companies can foster programs that are designed to enhance the
potential for goodwill: strategic philanthropy (buying good press by helping a
good cause), corporate social responsibility (acting on and demonstrating a
commitment to being a great corporate citizen), sustainability (substantiating
improvements in operations that reduce the negative environmental and social
impacts of the company), community investment (being an active
participant/sponsor in community events), and employee relations (treating
employees fairly) to name a few. Of course, if these "goodwill-hunting" efforts are
not genuine, high impact, or substantive, stakeholders will see through it as lip
service/window dressing/ green washing. That's going to be goodwill busting.

In my strategic communications practice as others do in this business, I'm sure

we talk about a client's bank account of goodwill. This is that reservoir of good
feelings that stakeholders link to a brand -- which is especially valuable when
said-client gets into trouble. Crises are better managed when a client has a bank
account of goodwill. Clients with goodwill are given the benefit of the doubt by
stakeholders at least at the beginning. A client that handles a crisis well ensuring
that stakeholders have what they need to weather the crisis can emerge the
other side with even better levels of goodwill.
REFERENCES

1. https://www.boundless.com ... Controlling and Reporting of Intangible Assets.

2. www.valuebasedmanagement.net/faq_characteristics_intangible_assets.html.
3. https://en.wikipedia.org/wiki/AirAsia
4. www.sunwayconstruction.com.my/about-us/vision-mission
5. https://www.digi.com.my/sustainability/page-vision.html
6. www.maybank.com/en/about-us/who-we-are/overview.pag
7. https://en.wikipedia.org/wiki/Maxis_Communications
8. https://en.wikipedia.org/wiki/Public_Bank_Berhad
9. www.7-eleven.com.ph/about/vision-mission-core-values
10. www.panasonic.com/global/home.html
11. ecoworldbuilding.com/english/?page_id=29
12. https://en.wikipedia.org/wiki/Petronas