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Glossary of Intellectual Property (English - Thai) Second Edition
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INTANGIBLE ASSETS

Intangible asset becomes valuable only when it is incorporated with value generating factors, thereby, any attempt to separate the intangible asset itself from the mentioned factors will make the intangible asset possess no value. The situation is cited as follow
  1. Value of some types of intangible asset depends largely on companys strategic marketing plan.
  2. Value of some types of intangible asset depends largely on companys customer base.
  3. Value of some types of intangible asset depends largely on companys artistic creativity.
  4. Value of some types of intangible asset depends largely on concessions that the company is engaged in.
  5. Value of some types of intangible asset depends largely on companys technological progress

Intangible Assets Valuation

Valuation Method of Intangible Assets is a calculation of capitalization rate and risk factors of the intangible asset through income approach method.

V=I/R
V=Value of Intangible Asset
R=Capitalization Rate
I=Net Cash Flow Generated by The Intangible Asset

There are 5 factors to take into calculation for discount rate.
  1. Future Cash Flow Forecast
  2. Year to Maturity
  3. Risk Free Rate
  4. Level of Fluctuation in Value of the Asset
  5. Other Specific Conditions such as Market Illiquidity or Non-Perfect Market Competition
Relating Risk Factors
  1. Production Cycle of the Product
  2. Market and Customer Acceptance
  3. Technological Changes
  4. Regulator Dependent Business
  5. Retaliation from Competitors
  6. Competitive Pricing Dependent Business

Valuation Method for Different Types of Intangible Asset

AssetTypeValuation Approach (Method)
1. SoftwareTechnology-basedCost approach (cost to create)
2. Customer relationshipsCustomer-relatedCost approach (cost to create)
3. Assembled workforceGoodwillCost approach (cost to create)
4. Non-compete agreementContract-basedIncome approach (before and after DCF)
5. In-process research and developmentTechnology-basedIncome approach (multi-period excess earnings)
6. Trade nameMarketing-relatedIncome approach (relief from royalties)
7. GoodwillN/AResidual

Discount Rate is used to reduce future benefit stream to PV

Sample of Intangible Asset Discount Rate International Use
1.Software / Technology18%
2.Customer relationships18%
3.Assembled workforce16%
4.Trade name16%
5.Non-compete agreement16%
6.Research orologi replica italia and Development
25%

Source : Financial Valuation Application & Models

 
 
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