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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: Internal Environment

Rohan Auto Ltd realises that its dealer network, a tangible-looking asset, is difficult to value, while its reputation for reliability and employee know-how also drive profits. Which of the following is correctly classified as an intangible resource of the firm?

Reputation for reliability is the intangible resource. Intangible resources lack physical form and include brand, reputation, goodwill, patents and employee know-how. Showroom buildings and machinery are physical tangible assets, and a bank cash balance is a financial resource, so none of those is intangible.

  1. AReputation for reliabilityCorrect
  2. BDealer-owned showroom buildings recorded in its books
  3. CPlant and machinery at the Chennai factory
  4. DCash balance in the bank

Explanation

Intangible resources have no physical form and include brand, reputation, patents and know-how. Buildings and machinery are tangible physical assets. Cash is a financial tangible resource. Reputation for reliability has no physical existence and is hence the intangible resource.

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