Question

a) Qantas has intangible assets as reported in the annual reports. Critically discuss whether these intangible assets are primary drivers of the company’s performance.

b) Given AASB138, there are intangible assets that are not represented on Qantas’s annual reports. Identify two such assets and their respective contributions to company’s performance.

Answer 1

Answer a

Intangible resources comprise intellectual, technological resources and reputation. Technological resources include an organization’s ability to innovate and the speed with which innovation occurs. Intellectual resources include patents and copyrights which themselves may derive from the organization’s technological resources (Henry 2008). Intangible resources are assets that are rooted deeply in the firm’s history and have accumulated over time. Because they are embedded in unique patterns of routines, intangible resources are relatively difficult for competitors to analyze and imitate (Hitt et al. 2008).

The reputation or goodwill of an organization is increasingly recognized as a valuable intangible asset which can easily be damaged by ill-thought-out strategies and marketing campaigns. Knowledge, trust between managers and employees, managerial capabilities, organizational routines, scientific capabilities, the capacity for innovation, brand name and the firm’s reputation for its goods or services and how it interacts with employees, customers and suppliers are intangible resources (Hitt et al. 2008).

Examples of Intangible resources:

Patents- Apple has the maximum number of patents followed by Microsoft, Google and yahoo.

Copyrights- It is registered with the United States copyright office as a service provider under the copyrights act of 17 USC 512

Answer b intangible assets that are developed in house don't form part of the balance sheet . Examples

Logo- for some companies logo are there biggest assets but they don't form part of the balance sheet

Self generated goodwill. - self generated goodwill are also one of the important asset but it is never shown in balance sheet