Intangible Assets

Intangible Assets

Intangible assets

These assets represent a company's standing and reputation, and are sometimes given monetary value although their real value is uncertain. They are usually introduced when a subsidiary is acquired, and may be converted into cash if the subsidiary is sold. These are goodwill, patents rights, trade-marks and the effect of advertising.

Some companies' balance sheets show a steadily decreasing amount for assets figure for goodwill, until it disappears (written off) altogether. This is generally a prudent policy. Some com-panies, however, keep a high figure for goodwill to deter takeover attempts. In such cases the balance sheet must show that there are adequate assets, apart from goodwill (i.e., tangible assets 'fixed and current'), to meet all the liabilities. Most of the industrial giants show no value attaching to goodwill or merely a token figure, e.g., Rolls-Royce, goodwill, £1!

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