ASSAINGNMENT

Subject: Financial Reporting and Analysis Submitted To: Mr. Hashim Zameer Submitted By:

Hasnain Ali

MB-11-40 (MBA 5th Semester Evening)

Department of Business Administration BZU Bahadur Sub Campus Layyah

Intangible Assets
Introduction
In current time the appreciation and measurement of intangible assets has been one of the most notorious areas of monetary reporting. Now a lot of business operates on the world and in the Pakistan economy and they also compete to each other through the intangible assets like brand name, good will. The intangible assets are should be categorized in these different name. Examples of assets that include patents, trademarks, import duties, fishing licences and

computer software. Goodwill and brand name are also examples of intangible assets which need to be recognized individually before they can be built in as assets of the business. They also called the intellectual property. DEFINITATION Intangible asset as assets which have no physical existence they have in non monetary form and they use in the production and promotion of business or supply of goods and services and for administrative purposes. Intangible asset can be classified in indefinite and definite assets. A company trademark name is called indefinite asset, and when a company enter into an agreement with other company and operate to use the logo or brand name of this company without planning and they are for short period is called definite assets. The Four Approaches for Measuring Intangibles Assets These are the four different approaches to measure the intangible assets these are; Direct Intellectual Capital methods (DIC) Through the different way identify the value of intangible assets. The direct intellectual capital method is a method through directly identify the assets moreover individually or as an cumulative coefficient.

Market Capitalization Methods (MCM) Through this method we measured the value to calculate the difference between a company's market capitalization and its stockholders' equity as the value of its intellectual capital or intangible assets. Return on Assets methods (ROA) During a specific time period percentage pre tax earnings of a company for a period of time are divided by the average tangible assets of the company. The result of the return on assets method compared with its industry average. The differentiation is multiplied by the company's average intellectual assets to calculate average annual earnings from the Intangibles. Dividing the above average earnings by the company's average cost of capital or an interest rate, one can derive an estimate of the value of its intangible assets or intellectual capital. Scorecard Methods (SC) The various Parts of intangible assets or intellectual capital are identified and generated in scorecards or as graphs. Scorecard methods are similar to direct intellectual methods, expect that no approximation is made of the value of the Intangible assets. A compound index may or may not be produced. The methods present different advantages. The methods present valuations, such as Return on assets method and Market capitalization methods are use full for measuring stock market valuations. They can also be used for comparisons among companies inside the same industry and they are good for describe the financial value of Intangible assets, a feature, which tends to get the attention of the CEOs. Finally, they build on long established accounting rules they are easily communicated in the accounting profession. The advantages of the DIS and SC methods are that they can create a more comprehensive picture of an organisations health than financial metrics and that they can be easily applied at any level of an organisation. They measure closer to an event and reporting can therefore be faster and more accurate than pure financial measures.