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1. Explain 3 differences between Property, Plant and Equipment (PPE) and Intangible Assets. 2. After reading...

1. Explain 3 differences between Property, Plant and Equipment (PPE) and Intangible Assets.

2. After reading this chapter, how would you advise your friends in the following cases. Please EXPLAIN your responses using appropriate legal/accounting terms.

a) Your friend, John, tells you that he wishes to open a coffee shop called, Starbucks.

b) Your friend, Jill, tells you that she will use the "swoosh" logo on her coffee mugs and sell it on Amazon.

c) Your friend, Alex, tells you he can copy the latest music album of Justin Timberlake on his CDs and sell it for a very cheap price on Amazon

Solutions

Expert Solution

Answer for 1)

Differences between PPE and Intangible assets:

a)PPE is for tangible fixed assets like land,equipment,vehicles etc. Where as Intangible assets are non physical assets like goodwill,Trade marks etc

b)Income generated from PPE is generally called rental income where as from intangible assets are called royalty.

c)PPE are required to run day to dat business activities where are Intangible assets may become organisations unique capabilities.

Answer for 2)

a)Here I would advise john john to better change the name or take franchise of Starbucks as opening a shop on the name starbuSta will be a patent issue.

b)Printing Swoosh logo which is famous brand will be a patent issue and I would explain Same to Jill.

c)Alex must understand that copying Justin Timberlake songs and selling it on Amazon will definitely cause patent issue.

In all the above cases if they neglect patent issue and proceed with their ideas may lead to payments of huge sum indemnity.

ekkarill92 answered 1 year ago
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