Choose three non-current assets. Describe at least two options which could be used to allow the...

Choose three non-current assets. Describe at least two options which could be used to allow the business to utilise them. What are the advantages and disadvantages of each option you described?
Discuss whether businesses should buy their non-current assets outright in

answer each question sperately

Expert Solution

The below are some of the examples of Non-current assets;

Tangible Assets:

Advantages: The tangible assets purchased by an entity can be utilised for the purpose of generating income by utilising its assets to the maximum possible economies. It will help in improving the production, service providing capabilities, quality, etc. of the company.

Disadvantages: If the company purchase any tangible assets without proper capital budgeting, it will lead to disruption in the working capital requirement, which is the day to day fund requirement of the company.

Intangible Assets

Advantages: Patents, rights, intangible property can be obtained by a company via its In-house research and development as well as purchase from other parties. Procurement of such rights will helps the company in having an edge over its competitors in the same industry.

Disadvantages: Technological disruption may lead to obsoleting of the intangible asset the company has procured with huge funds. It will lead to wastage of funds and limits its capabilities in its market segment.

Long term Investments

Advantages: An investment made at the right time and at the right price will help the company to obtain controlling rights in the management and hence by improving the net worth of its investments.

Disadvantages: A wrong investment decision made by the company may lead to negative net worth of the investments and it will not fulfil the economic interest of the company. Ultimately results in the wastage of resources.

ekkarill92 answered 7 months ago

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