CHAPTER ONE
1.0 INTRODUCTION
1.01 GENERAL
DESCRIPTION OF THE AREA OF STUDY
One
aspect of definition considers intangible assets as identifiable non-monetary
assets that cannot be seen, touched or physically measured, which are created
through time or effort and that are identifiable as a separate asset (from
Wikipedia (2009) intangible assets).
A
broader definition says that intangible assets have no physical characteristics
but are of value because of the advantages or exclusive privileges and rights
they provide to a business (from Financial Accounting by Roger H. Hermanson,
James Don Edwards and L.Gayle Rayburu).
Indeed,
intangible assets generally arise from two sources.
i)
Exclusive privileges granted by governmental
authority or legal contract such as patents, copyrights, franchises,
trademarks, trader names and leases.
ii)
Superior entrepreneurial capacity or
management know-how collaboration activities, leverage activities, structural
activities, customer loyalty which is called goodwill.
In
most companies today, intangible assets are a major value driver and account
for more than tangible assets. Research estimates that between 70% and 85% of
all assets are intangible assets. Intangible assets is also a non-physical and
non-current and are reported in a separate long term section of a balance
sheet.
1.02 BRIEF
HISTORY OF FIRST BANK OF NIGERIA PLC.
First
Bank of Nigeria Plc was founded in 1894 by sir Alfred Jones, a shipping magnate
from Liverpool, England. This bank is the premier
bank in West Africa and the leading financial
services solutions provider in Nigeria.
The bank’s contribution to the economic growth and development of Nigeria over
the last 116 years has been driven by commitment to the provision of excellent
bank services. The bank’s inception name was Bank of British West African
(BBWA).
Development
of intangible assets in first Bank of
Nigeria Plc began with the enhancement of the earning capacity of the bank via
strong emphasis on growth sector/strategic
Business Unit (SBU) alignment, service excellence and performance management.
The strength of the intangible assets bring to bear given the degree of
synergies present with our strong commercial banking franchise
1.03 STATEMENT
OF THE PROBLEM
Impact
of intangible assets on corporate performance must have been tremendous but
they are largely unaccounted in financial statements. The basic problem of this
study are:
a) The
inability of quantifying intangible assets by accountants and financial
analysts. Different approaches used by them (accountants and financial
analysts) complete on how to define, classify and incorporate these assets within
mainstream accounting and valuation.
b) The
absence of effective and efficient understanding of how intangible assets can
creates arguments in the heart of the business case for corporate
responsibility.
c) Intangible
assets being largely unaccounted in financial statements. For example, the
balance sheet assets of coca-cola or Microsoft
account for less than 5% of their total value.
1.04 Purpose
Of The Study
The
aim of the study are as follows:
i.
To determine the intangible assets on
profitability of the organization.
ii.
To evaluate difficulties in measuring
intangible assets.
iii.
TO find the effect of unaccounted intangible
assets on financial statements.
1.05 RELEVANT RESEARCH QUESTIONS
1. What are the
impact of intangible assets in first bank of Nigeria plc?
2. What are the
information and current innovations intangible assets has supplied on corporate
performance?
3. What are the
ways intangible assets influence and improve the performance of companies?
4. Is there any
negative effect on the impact of intangible assets on companies when they fail
to adhere to the recommendation of financial accountants?
1.06 DELIMITATION
(SCOPE) OF THE STUDY
Delimitation:
In this study, the researcher limits his research to finding impact of
intangible assets on a corporate performance using First Bank of Nigeria Plc as
her case of study organization.
In the organization, First Bank of Nigeria
Plc, she used the managers, accountants, account clerks and cashier.
LIMITATION: The researcher encountered several
difficulties that restrained the collection of his data. As a result of this,
the reader should not think that the researcher conducted this research on a
smooth sailing platforms. Thus, that the whole information she needed was given
to her. However, all efforts were made to make
sure that unbiased data were collected. The impediments encountered are:
Office
Protocol: The office protocol of First Bank of Nigeria Plc, Afikpo which includes
visiting the company only on certain days. Their visiting days posed an
obstacles on the company as some of the visitation days were not convenient to
her. Again, the bank’s policy of not giving out confidential information was
equally a problem.
Questionnaire:-
Many people feel reluctant to complete the questionnaire. The mood of the
respondents generally affected the answers given and analysis were delimited to
the answers got.
Time:
The period given for the completion and submission of the project report was
not enough for the researcher to carry out an effective all-embracing research
on the topic chosen. And being a student, academic works restricted the time
given to the research.
Financial:
The researcher was constrained by high cost of materials used for the
production of the project. Also, being a student who was dependent, the researcher
had a little finance at her disposal to buttress the research.
1.07 ASSUMPTIONS
During
the course of this study, it is assumed that the management of First Bank of
Nigeria Plc would co-operate with the researcher by completing and returning
the questionnaires.
-
Also that the supervisor will provide the
researcher the necessary guidance required to complete the study successful.
-
It is assumed that the researcher will fight
tooth and nail in all ramifications to reach the accomplishment of this project
by using textbooks and journals.
-
The researcher assumes that financial
constraints and time limit will not prevent the researcher to find out the
essential material for this project.
-
The researcher also assume that the
knowledge derived from this project will enhance her knowledge. For future
prospect as a prospective accountant.
1.08 SIGNIFICANCE OF THE STUDY
It
is the fervent belief of the researcher that this study shall be of immense
belief to users while making various economic and investment decision by:
a. Pinpointing
area(s) of concentration in the analysis of intangible assets by users to suit
their purposes.
b. Serving
as immediate reference point and as a “self teacher” in the analysis of
intangible assets.
Serving as reference point for future researchers.
1.09 DEFINITIONS
OF UNFAMILIAR CONCEPT
- Amortization:-
It is the term used to describe the system write-off of an intangible asset to
expense.
- Leasehold: - The rights granted under a
lease
- Useful
life:- It is the length of time the company holding a depreciable, depletable a
amortizable asset intends to use it.
- Patents:-
A patent is a right granted by the federal government giving the owner the exclusive
right to manufacture, sell, lease or otherwise benefit from an invention for a
limited period of time.
- Copyrights:
A copyright is an exclusive right granted by the federal government giving the
owner protection against the illegal reproduction by others.
- Franchises:
- A franchise is a contract between two parties granting the franchises
(purchases of the franchise) certain rights and privileges to use the name of
the business for a service in which he pays a sum of money called ROYALTY to the franchisor.
- Trademarks
/ Trader-names:- It is a symbol, design, or co-operate logo used in conjunction
with a particular product or company. A trademark is sold or a company does
business
- Leases:- A
lease is a contract to rent property
- Goodwill:
- It is an intangible value attached to a company resulting mainly from the
company’s management skill and a favorable reputation with customers to produce
an above-average rate of return on investment.
- Effective:-
It can be defined as having the desired effect producing the intending result.
- Corporate
Performance:- It is the set of processes, customs, policies, laws and
institution affecting the way a corporation (or company) is directed,
administered or controlled.
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