intangible resource example

“It has intangible value that has a significant impact on the sales for PepsiCo, and thus, the success of the business.” Amortization is the same concept as depreciation, but it’s only used for intangibles. Amortization spreads out the cost of the asset each year as it is expensed on the income statement. Negative brand equity occurs when consumers are not willing intangible resource example to pay extra for a brand-name version of a product. For example, producers of commodity products, such as milk and eggs, may experience negative brand equity because many consumers are not concerned with the specific brands of the milk and eggs they purchase. Brands are important because they contribute to a company’s brand equity and help keep customers loyal.

intangible resource example

For instance OEM appliance and software developers are looking for ways to outsource the manufacturing to contract manufacture partners because the leaders in this area have trained and professional employees. When an intangible asset has a finite useful life, it should be amortised. Amortisation is the process of charging the cost of an intangible asset as an expense. By contrast, an intangible asset that has an indefinite life is valued on a yearly basis. For example, if Company X buys the trade secrets/recipe of Company Y for $10 million, its lifespan is unknown. If the deemed value falls beneath the initial cost, then this would be accounted.

Tangible Assets vs. Intangible Assets: What’s the Difference?

In this chapter, we will further explore methods for identifying and understanding the potential of library intangible assets. This is a fundamental step in the intellectual capital management process. This action can then create new intangible assets or reject old ones, thus requiring a repetition of the abovementioned process. Therefore, the framework conducts measurements using indices linked to intangible assets and the library’s strategic goals. Hence, it is actually a scorecard-type method with the intangible assets being categorized into human capital, information/technology capital, and organizational capital. Intangibles classified under “structural capital” include library systems, databases and the level of IT literacy.

The main interactivity relationship logic is sequential (Stabell and Fjeldstad, 1998). The company essentially masters two domains, which are supply chain excellence and 360° mastery of the customer relationship over the Internet or through call centres. The former allows the company just-intime delivery of required components, build-to-order production and thus low stocks and consequently competitive prices. The latter is crucial because Dell does not dispose of a dealer network and for cost reasons only makes use of direct channels to sell its product. If it does not excel in customer relationships it has no possibility to reach, gain or retain customers.

Current Assets

Real estate is not considered personal property because it cannot be moved, which is a determining factor in identifying personal property. Brands are important because they contribute to a company’s brand equity and help keep customers loyal. Some consumers may choose to ignore pricing and pay more for one company’s product out of loyalty even if it is priced higher than a similar product offered by a competitor.

A shorter remaining useful life reduces the asset’s significance in the market approach. On the other hand, an extremely long estimated remaining useful life as compared to the comparative intangible indicates high value of the intangible under examination. In the income approach, the remaining useful life estimation is a prerequisite for the valuation process in order to predict intangible duration or the amount of income flows. In this approach, the variations of the estimated remaining useful life of an intangible become less important as the estimated remaining useful life increases. Extremely short or long useful remaining values raise questions about the underlying reasons (external or internal to the library) for their existence.

Social Movements: Resource Mobilization Theory

The attribute REASONING describes the firm’s motivation to conclude a partner agreement and outlines its analysis. We distinguish between three rough categories of motivation; these are optimization and economies of scale, reduction of risk and uncertainty and finally acquisition of resources. The more of these properties a resource possesses, the more likely it can help competitively differentiate a platform from its rivals. A resource can help create a competitive advantage if it is valuable and rare. A resource can help sustain a competitive advantage if it is inimitable and nonsubstitutable.

  • Intangible assets, on the other hand, lack a physical form but still have value to the company due to their potential to generate future revenue or provide a competitive advantage.
  • That way, the firm is able to fully benefit from an expensive project – something that would not be profitable with two or more firms.
  • Businesses commonly use marketing, design techniques, and advertising to come up with their brands.
  • Intangible resources comprise intellectual, technological resources and reputation.
  • Such outcomes feed into the learning process of bank management; launching the next iteration of the bank’s trading/operations strategy.

The background for any financial valuation attempt is to clarify the objective of the valuation, and identify and prioritize intangible resources/assets. Another important motivation factor for a life analysis study is the estimation of the remaining useful life of the intellectual capital resource. This can be estimated either informally (based on expert opinions or other judgments) or may result from formal survival analysis methods, which will be presented later in this chapter.

Patents, inventions, formulae, processes, designs, patterns, trade secrets, and know-how are all examples of intellectual property. It is the difference between the fair market price or book value of all the business assets and the sale price. It may be used in accounting for the purchase of all or part of a company. Other intangible assets may also be valued and included in the sale price of a business.

Is money an intangible resource?

Cash is neither an intangible nor a tangible asset. It's considered a financial asset, which is an item you own that has monetary value and comes from a contractual claim. Financial assets include cash flow, bonds and bank deposits.

A patent is a contract that provides a company exclusive rights to produce and sell a unique product. The rights are granted to the inventor by the federal government and provide exclusivity from competition for twenty years. Patents are common within the pharmaceutical industry as they provide an opportunity for drug companies to recoup the significant financial investment on research and development of a new drug. Once the new drug is produced, the company can sell it for twenty years with no direct competition.

Fast-and-frugal financial analysis

Current assets include items such as cash, inventory, and marketable securities. These items can be readily sold to raise cash for emergencies and are typically used within a year. Physical resources includes such things as the current state of buildings, machinery, materials and productive capacity (Henry 2008). With Debitoor invoicing software, it’s easy to keep track of your company assets. We cannot ignore the intangible value clients bring in, while we discuss the untouchable and abstract resources that bring value to a business.