Question
In: Accounting
Which of the following refers to an intangible asset of a business that is created from...
Which of the following refers to an intangible asset of a business that is created from such favorable factors as location, product quality, reputation, and managerial skill? a.Goodwill b.A patent c.A trademark d.A copyright
Solutions
Expert Solution
Correct answer is Goodwill. Goodwill is an intangible value attached to a company resulting mainly from the company’s management skill or reputation or a product quality etc. Evidence that company is having goodwill is that whether company is generating extraordinary profit.Individual quantification of each of the above mentioned factors are not possible, they altogether constitute goodwill.
Reason for not including other intangible assets.
Patent : This is an right which allows the owner to manufacture, sell, lease, or otherwise benefit from an invention for a specific period. it is a privileage of restraining others from using of the invention.It is not emerging from any favourable factors such as product quality, reputation etc.
Trademark : A trademark is a symbol, design, or logo used in a particular product. It is only a logo or symbol or design only. it is not generating from any reputation or managerial skills etc.
Copyright: Copyright is an exclusive right given by government giving right against the illegal reproduction by others of the literary productions , designs etc. which is also not emerging from the favourable factors mentioned above.
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