Below Are Several Intangible Assets

question 81

Essay

Below are several intangible assets. For each case suggest whether the item should be amortized. If amortization is recommended, what is the useful life that it should be amortized over? Provide justification for your recommendation.
a. Aye Corp purchased a brand name for $1,000,000. The firm has the exclusive right to use this name forever.
b. Bee Corp has developed a strong corporate reputation and its products are highly sought-after in the luxury goods market. Last year, $40,000,000 was spent on advertising its brand in top-tier fashion magazines and at the top fashion shows around the world.
c. Cee Corp paid $25,000,000 for the five-year exclusive privilege to have a famous celebrity endorse and use the company's sports equipment. This contract entitles Cee to renew the contract for a further two-year exclusive endorsement arrangement for a fixed fee of $10,000,000, due midway through the last year of the current contract.

Evaluate the strategies companies use to defend against antitrust actions.

Differentiate between horizontal, vertical, and conglomerate mergers.

Understand the concept of market dominance and the criteria used to evaluate it.

Identify the influence of corporate takeovers and defenses on corporate strategy and structure.

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Definitions:

Four Little Asian Tigers

Refers to the economies of Hong Kong, Singapore, South Korea, and Taiwan, known for their rapid industrialization and high growth rates from the 1960s to the 1990s.

Developing Countries

Countries considered to be on the road to industrialization.

Global South

A term used to describe countries considered to be among the less developed and often poorer nations, primarily located in the Southern Hemisphere.

Third World

A term originally used to describe countries that were not aligned with either the capitalist NATO bloc or the communist Eastern bloc during the Cold War, now often referring to developing countries.