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.

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Definitions:

Radio Shows

Audio programs broadcast via radio waves, featuring a variety of content including music, talk, news, and entertainment.

Interactive Seminars

Sessions designed to engage participants with hands-on activities, discussions, and active learning, often around a specific topic or skill.

Online Chats

A real-time text-based communication platform used over the internet that enables the direct transmission of messages, images, or files between users.

Digital Communication

Digital Communication involves the exchange of information or messages between devices or individuals using electronic channels, such as email, social media, or messaging platforms.