This document discusses intangible assets, which include brands, publishing rights, intellectual property, copyrights, and licenses. It defines these types of intangible assets and provides examples. The document also discusses accounting standards for intangible assets, how they are measured and recognized, implications for financial management, and approaches for valuing intangible assets, including the cost approach, market approach, and economic approach.

1. ANJUMAN - I – ISLAM’S
ALLANA INSTITUTE OF MANAGEMENT
STUDIES

2. Project on Analyze of Financial
Statement
ON
INTANGIBLE ASSETS
SUBMITTED TO:-PROF. T.M.C.VARADARAJAN

3. Team Members:-
 Arshi Ansari – 1
 Yusuf Bhanpurwala – 10
 Almas Syed – 56
 Altaf Surya - 55

4. 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.

5. Characteristics of Intangible assets
1. Non-Rivalry
2. Hazy Property rights
3. Investment is risky
4. No organized & competitive market
5. Value accounted by the future growth value
6. Difficult to figure out real worth

6. Types of Intangible assets
 Brands
 Publishing Rights
 Intellectual Properties
 Copy Rights
 Licenses
 Goodwill

7. 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.

8. 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).

9. 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.

10. 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.

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

12. (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.

13. Balance Sheet
Liabilities Assets
 Share capital  Fixed Assets
 Secured Loans  Intangible Assets
 Unsecured Loans  Tangible Assets
 Currents Liabilities  Investments
 Current Assets

14. Measurement Subsequent to InitialRecognition
 Amortisation
 Internally Generated Goodwill
 Internally Generated Intangible Assets
 Recognition of an Expense

15. Recognition and Initial Measurement of an
IntangibleAsset
 (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

16. Implication for Financial Management
 Organization and Innovation
 Strategic Management of Intangibles
 Intangible Assets as a Source of Competitive
Advantage
 Managing Intellectual Capital
 Protecting Intellectual Capital

17. 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

18. Approaches to valuing Intangible Assets
 Three approaches to valuing an intangible assets:-
1. Cost Approach
2. Market Approach
3. Economic Approach

19. The economic Approach of valuation
Two types:-
1. Estimate the cash flow/earnings
Direct Identification method
Brand contribution method
2. Capitalize the cash flow/earnings
Discounted cash flow method
Earnings multiple method

20. Thank You