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Intangible Assets Essay

3783 words - 16 pages

Intangible assets- practical approach

An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be ...view middle of the document...

In order to better understand the table presented, the intangible assets, net carrying amount refers to the sum of the carrying amounts of all intangible assets, excluding goodwill in conformity with the balance sheet, net of accumulated amortization and impairment charges. The net carrying amount of Oracle’s intangible assets declined slightly from 2010 to 2011 but increased from 2011 to 2012, exceeding the 2010 level and the levels before that. The goodwill from the table refers to the carrying amount from the balance sheet which is the cumulative amount paid and the fair value of any non-controlling interest in the acquire, adjusted for amortization in excess of the fair value of net assets acquired in one or more business combination. To make it more clear, the goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technologies. In an acquisition, the amount paid for the company over book value usually accounts for the target firm’s intangible asset. The goodwill of Oracle has seen a constant increase in the past years, from 2010 to 2011 and from 2011 to 2012. The intangible assets including goodwill refers to the sum of the carrying amounts of all intangible assets, including goodwill as seen in the balance sheet, net of accumulated amortization and impairment charges. These also increased from 2010 to 2011 and 2011 to 2012. Overall, the table only emphasizes the statement made above, that Oracle started to invest more and more when it comes to the intangible asset, following the market trend but also because it is an area that will offer great returns if analyzed correctly that will reflect in the result of the period and of course in the equity. All the numbers presented have been done in millions of dollars.
Since it seemed only a logical step even for companies that were based mostly on tangible asset to reset their focus and keep up with the market (almost 80% of the stock market value of modern corporations is constituted by intangible assets), a problem arises, how to evaluate and analyze the intangible asset. The return from investing in intangible assets is difficult to measure; this presents major challenges for financial service analysts to provide more meaningful and relevant information to shareholders. A fully automated solution for intangible asset evaluation is not available at the current time but a combination of technologies could provide analysts with the tools they need to locate and extract the data need when talking about intangible assets. It can provide companies financial services; more exactly present a simplified blueprint for assembling the right components for an automated asset-evaluation. One of the fundamental qualitative characteristic of an asset is the faithful representation that implies that the depiction of the asset to be complete, neutral and free from error. In order to have a...

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