ANJUMAN - I – ISLAM’S

ALLANA INSTITUTE OF MANAGEMENT STUDIES

ON

INTANGIBLE ASSETS

S U B M I TT E D T O : - P R O F. T. M . C . VA R A D A R A J A N

Project on Analyze of Financial Statement

Team Members:-

Arshi Ansari – 1Yusuf Bhanpurwala – 10Almas Syed – 56Altaf Surya - 55

Intangible – Intensive Companies

Meaning:-The terms knowledge assets, intellectual

capital, and intangible assets are used interchangeably. Economists call them as knowledge assets, management experts refers to them as intellectual capital, and accountants call them as intangible assets or simply intangible.

Characteristics of Intangible assets

1. Non-Rivalry2. Hazy Property rights3. Investment is risky4. No organized & competitive market5. Value accounted by the future growth value6. Difficult to figure out real worth

Types of Intangible assets

BrandsPublishing RightsIntellectual PropertiesCopy RightsLicensesGoodwill

Brands

Definitions:-Brands enable consumer to identify products

or services which promises specific benefits. They arouse expectations in the minds of customer about quality, price, purpose and performance.

Publishing Rights

Meaning:-These are rights for commercial exploiting

creative and knowledge based material. From a legal point of view, the principal publishing rights are Copy Rights (Books, Article, Photograph, Illustration and so on), Trademarks (title of magazines, books and so on), Get-ups (formats, appearance, and so on).

Intellectual Property

Meaning:-Intellectual property usually covers patents,

trade mark, register designs and copyrights. The owner of an intellectual property is legally protected against its unauthorized use.

CopyRights

Is a set of exclusive rights granted to the author or creator of an original work, including the right to copy distribute and adapt the work.

Licenses

Licenses is an agreement through which a licenser assign certain rights to a licensee in return for a consideration.

(AS) 26 - Intangible Assets

Definition:-An intangible asset is an identifiable non-

monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.

An asset is a resource:(a) controlled by an enterprise as a result of past

events; and(b) from which future economic benefits are

expected to flow to the enterprise.

Liabilities Assets

Share capitalSecured LoansUnsecured LoansCurrents Liabilities

Fixed AssetsIntangible AssetsTangible AssetsInvestmentsCurrent Assets

Balance Sheet

Measurement Subsequent to InitialRecognition

AmortisationInternally Generated GoodwillInternally Generated Intangible AssetsRecognition of an Expense

Recognition and Initial Measurement of anIntangibleAsset

(a) definition of an intangible asset(b) the cost of the asset can be measured

reliably(c) it is probable that the future economic

benefits that are attributable to the asset will flow to the enterprise; and

(d) An intangible asset should be measured initially at cost

Implication for Financial Management

Organization and InnovationStrategic Management of IntangiblesIntangible Assets as a Source of Competitive

AdvantageManaging Intellectual CapitalProtecting Intellectual Capital

Balance Sheet as on 30th April, 2005

Liabilities Amount Amount Assets Amount Amount

SOURCES OF FUNDS       FIXED ASSETS    

Capital a/c   XXXX   Goodwill   XXXX  

(Add)Net Profit   XXXX   Patents XXXX XXXX

    XXXX   Copyrights XXXX  

(Less)Drawings   XXXX XXXX Trade Mark XXXX XXXX

      Building   XXXX

RESERVES AND SURPLUS     Machinery    

  INVESTMENTS    

         

         

LOANS     CURRENT ASSETS    Loan from Bablu a/c

    Cash a/c   XXXX  

        Bank a/c   XXXX  

        Closing Stock a/c XXXX  

CURRENT LIABILITIES     Sundry Debtors XXXX  

Creditors   XXXX   Arial & Co. a/c XXXX  

Usha & Co a/c   XXXX XXXX Wheel & Co. a/c XXXX XXXX

             

Bank Overdraft a/c     XXXX        

        MISCELLANEOUS EXPENSES    

               

        Profit and Loss a/c   XXXX

               

               

               

      XXXX     XXXX

                 

Approaches to valuing Intangible Assets

Three approaches to valuing an intangible assets:-

1. Cost Approach2. Market Approach3. Economic Approach

The economic Approach of valuation

Two types:-1. Estimate the cash flow/earningsDirect Identification methodBrand contribution method2. Capitalize the cash flow/earningsDiscounted cash flow methodEarnings multiple method

Thank You