Question (7) A business\'s financial statements show a significant increase in t

Question

Question (7) A business's financial statements show a significant increase in the amount of patents and trademarks it has purchased during the most recent period. What is the likely impact of this on the business's borrowing needs? onded O Borrowing needs will remain the same because intangible assets are financed with equty. O Borrowing needs are likely to decrease duing the period. O Borrowing needs are likely to increase during the period O Borrowing needs will remain the same because intangible assets do not require cash

Explanation / Answer

As intangible assets can also be given as collectectal security

So that means the borrowing needs are likely to increase as purchase of asset leads to expense

So correct answer is C borrowing needs are likely to increase during the period

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