The Company Logo—an Asset or Expense? Essay

1388 Words Dec 17th, 2011 6 Pages
The Company Logo—an asset or expense?
As the title of this essay suggests, it must first be decided whether the company symbol or logo should be recognized as an asset or an expense. An asset is defined as something of value, such as cash, equipment, inventory, or buildings, while expense is defined as something that has a negative effect on the value of the practice, such as accounts payable. The simple question that needs to be answered is “Does the company logo contributes to or takes away from the value of the business”? Since the company has to pay for the consultant company, the logo could be considered an expense, however, the logo contribute to the revenue of the business in many ways like build the image of the company, establish
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For example, if customers have a positive experience for the company’s products and services, they will become loyal customers who will give back to the company and encourage others to try the services and products. In this sense, the logo acquired by the Real and Reel will generate future economic benefits to the entity. Besides, the logo purchased by Real and Reel is a private property of the company, which means that the company control the benefits and excludes others to use or enjoy the privileges. In addition, the company’s acquisition of the logo is from the dealing with a consultant at a cost of $300,000. This past transaction definitely give Real to Reel company the control of the future economic benefits derived from the logo.

However, assets can be categorized into fixed assets and intangible assets. Fixed assets are tangible assets acquired by the business used in operations like property, plant and equipment. Intangible assets are assets of value without physical substance that are used in business such as licenses, patents, trademarks, copyrights and ect. The intangible asset is defined as ‘an identifiable non-monetary asset without physical substance’. (Deegan 2010) An asset meets the identifiability criterion when it is separable i.e. is capable of being divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract,

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