Non-current assets are assets that are keptwithin the business for longer than one year. Those assets are kept with theintention of not selling them straight away. This type of asset is kept forlong term purposes, which is beneficial. Brand would be referred as anintangible asset. The reason is because it is not a physical asset. The brandtends to become successful when the consumers would have the intention to buythe goods. Non-current assets should be clear on statement of financialposition as they are long-term investments. Muscone’s limited should make surethat the financial statement should get fixed to make sure that the businessruns well.
Brand does hold value to the business meaning it should berepresented in financial position. The brand would be measured in terms ofvalue attributed by consumers of the product. The brand would be referred asgoodwill which should be recognized in non-current assets on the company’s statementof financial position. Any changes to the brand could make a huge difference incustomers purchase. There is a difference between brand and product.
Brandgives a value to the product which can be bought by consumer properly after fewyears’ time if Muscone is noticing that the name of the brand is decreasing orhe is making loss then in the future the brand would be an asset which could besold. Whereas, products can be recreated and changed to favour customers butbrand would be unique. Perfume is a product that can be changed over time tosuite the customers, which would get sold within one year period.
Theperfumes itself would not go under non-current assets. Their product in thiscase the perfume would be changed or more would be produced to favour thecustomers which means there are chances for more perfumes to be created. Thegood should be in the current assets whereas, brand should come undernon-current assets. If there is a huge amount of repair to do within thefinancial statement, it could lead the business into a downfall. The reason isbecause it would lead the business into bad debt. This would encourage themanager of the business to borrow money to use effectively to get the businessgoing. If the business does borrow money and still does not make profit, the businesswould struggle to pay of the debts.
The repairs would be classified asliability as the accountant must make sure the business keeps the financialstatements on track and fix any errors. Financial statements are used as asource to judge how well the business would do in the future and theinformation on statements are initial to make good decisions. When it comes torepairing the product, it is necessary for the business to get feedback fromconsumers to improve the product. The products would be designed and tested tosee if it would become well-known and the satisfactory level. When the productgets sold and they make a profit, it would prevent them from being in debt.
However, If the repairs are not made in statement of financial position, thenthe business would be in financial debt, which would be recognized asliability.