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The company that has been chosen for the analysis is Apple Inc. The main question of this research is to define how the company represents and treats intangible assets in its financial statements. That is why it sounds reasonable to provide definition and explanation of the term “intangible assets”:

Intangible asset is an asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. (Intangible Asset Definition)

Simply speaking, intangible assets relate to such assets like a company’s brand, image, intellectual patents, etc. This type of assets is especially important for such company as Apple, since the company performs in the industry where intellectual potential and image play a crucial role. The company’s intangible assets consist of two groups – goodwill and acquired intangible assets. Acquired intangible assets are usually other companies and brands.

There are a few ways to treat and represent intangible assets in financial statements. The company uses market capitalization method. Goodwill and other intangible assets are accounted according to market value. The difference between the company’s market capitalization and shareholders’ equity is treated like an influence of growth or decline of intangible assets.

In order to analyze the company’s intangible assets, the company’s annual report for 2014 is going to be used. According to this annual report, the main intangible asset of the company is goodwill. The company amortizes its goodwill and other intangible assets, taking into account their useful lives and potential impairments. In addition, special attention is paid to acquired intangible assets.

Knowing how the company’s intangible assets are reflected in financial statements, it is possible to analyze its dynamics for the several past years and share in the overall company’s assets. The company’s intangible assets are divided into goodwill and acquired intangible assets.

As it can be seen from the table above, intangible assets have grown significantly for the last year. This growth has been mainly provided by the company’s goodwill. This growth is caused by the growth of the company’s shares on the market. The company has presented the new iPhone 6 and acquired some new brands. It has been realized in the growth of value of its goodwill. Generally, the company’s intangible assets have grown for 52% for the last year.

Moreover, it can be seen that acquired intangible assets play a crucial role in the overall value of intangible assets of the company. It means that the main direction in the company’s strategy of business expansion is growth via acquisition of the other perspective and weaker companies on the market.

Finally, it is important to evaluate the share of the company’s intangible assets in its overall assets. The results of such calculations are provided in the following table.

Intangible assets do not play a crucial role in the company’s balance sheet. Intangible assets do not bring significant financial bonuses for the company. They rather are an indicator of the company’s image on the market and degree of customers’ loyalty. On the other hand, they still are an integral element of the company’s assets.

The most important element in financial analysis is to define how the company’s financial indicators change. It has been already mentioned that the company’s intangible assets have grown for the last year significantly. It is essential to define whether it has affected the degree of the company’s financial solvency and profitability. The data is provided in the table below.

Generally, the company’s indicators of financial solvency and profitability have not improved. Dividends from growing intangible assets have not been realized yet.