ELEMENTS and ASSETS

Elements and Assets

In project management, the elements are categorized as follow:

• Tangible Elements

- Tangible Assets

- Tangible Non Asset Elements (Only Market Share)

• Intangible Elements

- Intangible Assets

- Intangible Non Asset Elements

Elements can be specifically described.

Assets, in addition, can have a monetary value.

As non asset elements do not have value so, they do not appear in the Business Value Equation.

Despite some non assets elements may contribute to creating business value, but they still not considered assets.

For example, superior profitability potential is a key factor (non asset element) that increases the business goodwill (intangible asset).

Here are examples for:

• Intangible non asset elements:

- Business longevity

- Exclusive market access

- Competitive advantages

- Profitability potential

• Tangible non asset elements:

- Market share (only)

Tangible and Intangible

Elements are described assets if simultaneously they:

• can be specifically described.
• can have monetary value.

Tangible assets are assets that (have physical existence) or (is monetary assets).

Intangible assets are assets that (do not have physical existence) and (are not monetary assets).

Assets are described identifiable if they have a monetary value independently from the Organization.

The identifiable assets can be sold separately from the organization.

Assets are described unidentifiable if have a monetary value as long as it is associated with the organizations.

The unidentifiable assets can not be sold separately.

All tangible assets are identifiable.

Intangible assets can be identifiable or unidentifiable.

The unidentifiable intangible assets are known as Goodwill.

Examples of identifiable tangible assets are:

• Buildings
• Equipment
• Fixtures
• Monetary Assets (e.g. Cash, cheques, credit in bank account, treasury bonds, etc.)

Examples of identifiable intangible assets are:

• Trademarks
• Patents
• Copyrights
• Franchise Agreements (Licensing)
• Proprietary Technology (e.g. Computer Applications, IT systems, IT tools, etc.)
• Internet Domain Name

Examples of unidentifiable intangible assets (Goodwill) are.:

• Company’s name
• Brand recognition
• Reputation
• Customer base
• Customer relations
• Employee relations
• Supplier relations

Goodwill in Business Value

Goodwill appears in the business value, that represented by the acquisition balance sheet (not financial position balance sheet), separately from the intangible assets.

This means the organization's total assets do not include the unidentifiable assets (Goodwill) but include only the identifiable assets.

Business Value = Net Value of Assets

Business Value = Stock Equity + Goodwill

In Finance:

Stock Equity = Total Assets - Total Liabilities

We shall not consider this equation as liabilities are identifiable assets as well

It is an identifiable assets in negative value.

In Project Management:

Stock Equity = All Assets Except Goodwill

Stock Equity = Identifiable Tangible Assets + Identifiable Intangible Assets + Unidentifiable Tangible Assets + Unidentifiable Intangible Assets

Hence:

1. Unidentifiable Tangible Assets = None

2. Unidentifiable Intangible Assets = Only Goodwill

Thus:

Stock Equity = Identifiable Tangible Assets + Identifiable Intangible Assets

Thus:

Business Value = [Identifiable Tangible Assets + Identifiable Intangible Assets] + Goodwill