Superlative Productions spent 10 million dollars to buy the rights to a best-selling novel. The company then prepared for production by hiring a screenwriter to adapt the novel, casting the main roles, renting cameras and other equipment, and scouting locations in southern Arizona. Which of the following pairs of resources are both intangible?
a. money spent to buy rights of novel; screenwriter's experience adapting novels
b. money spent to buy rights for the novel; locations in southern Arizona
c. best-selling novel; locations in southern Arizona
d. best-selling novel; screenwriter's experience adapting novels

Option A is wrong because the actual cash outflow of $10 million used in buying the rights to the best selling novel is an intangible since it is a physical substance that can be moved, touched or even carried about.

Option B is wrong for the same reason, but in addition the cost of scouting for locations is just an expense as it has nothing to do with tangible or intangible asset,same applies for option C.

Option D is correct because cost of intellectual property such as the novel is an intangible as well as the cost of screenwriter's experience.

BenitoMarin BenitoMarin · Answer 2 · 2020-03-29T09:50:36+02:00

Answer:

The correct answer is letter "D": best-selling novel; screenwriter's experience adapting novels.

Explanation:

Intangible assets do not exist physically yet since they represent potential revenue, they are important. Intellectual property is one form of intangible asset which includes legal rights such as patents, trademarks, and copyrights. Intellectual property has a fixed lifetime. As a result of this short lifespan, intangible assets are amortized, therefore, spent over their legal lifetime.

Therefore, a best-selling novel and a screenwriter's experience adapting novels represent intangible assets.