The paper "Intangible Assets in the BCCL" is a perfect example of a finance and accounting assignment. Both the artwork and patents are considered to be intangible assets in the BCCL. It is important to understand that intangible assets form the non-physical section of assets that provide value or even a marketplace competitive edge and will usually have a useful life that exceeds one single year. For the case at hand, patents are intangible assets that are categorised as being intellectual property. The process involved with the efficient valuation of accounting of imminent intangible assets is deemed to be a challenge, which is in fact brought about by the manner for which these intangible assets are handled.
In the guidelines set forth by the generally accepted accounting principles (GAAP), intangible assets are basically listed on the financial statement of a company only in the event that they have been acquired and thus, assets that have an identifiable value and useful lifespan can thus be subjected to amortisation process. Internally generated intangible assets would normally not appear in the balance sheet. In the case of BCCL, the artwork has been acquired hence; it is suggested that they are included as long-term assets of the company in accordance with their purchase prices and amortisation schedules. For the case of patents, which is assumed to be generated internally, it is recommended that it does not appear in the firm’ s balance sheet given that there is not a marketplace that can be used to ascertain its underlying value.
There is no specific absolute price that can be used to value the patent hence it is important that it does not feature in the balance sheet altogether. Question 6 Contribution margin= sales price per unit- total variable costs per unit Sales price per unit= $350 Total variable costs per unit= 80,000+45,500+180,000/ 1,300= $235 Thus, contribution margin per unit = $350-$235= $ 115 It is important to note that a contribution margin per unit is the underlying selling price of products offered less the variable cost per unit.
The contribution, in this case, represents the overall portion of the sales revenues that have not been used up by variable costs and thus, plays a great role in covering for the existing fixed costs.
In numerous fields, the contribution margin per unit is perceived to be a useful measure that is adopted in numerous calculations and hence used for operating leverage. For most cases, a lower contribution margin is prevalent in most labour-intensive sectors while high levels are mostly seen in the capital-intensive industry as a whole. When offered with a contribution margin, managers can easily compute both break-even and target incomes sales for their products or services. In this regard, it is deemed to be a better tool that allows managers to make efficient and better decisions on whether or not to add or even minus a product line and also, on the best pricing strategies for these products.