Appraisal of Intangibles, Trademarks and Patents

An appraisal of intangibles is made in accordance with the Financial Reporting Standards (NIF) issued by the Mexican Institute of Public Accountants (IMPC) and the Mexican Council of Financial Information Standards, AC (CINIF).

The standard defines intangible assets as those identifiable, without physical substance, used for the production or supply of goods or provision of services or for administrative purposes. In the current definition, “used for the production or supply of goods or provision of services or for administrative purposes” was removed and “non-monetary assets” were added; The foregoing, in addition to converging with IAS-38, specifies said definition and allows the use of a more generic term.

What aspects are considered within the appraisal of intangibles?

Among the most important aspects that we have to consider in the appraisal of intangibles is the useful life in the assets, which depend on the treatment in the durability that are issued by the schools, theses, international deals and then they are made official for their application in tax, commercial or constitutional law, as well as in international standards that are ultimately used for both financial and strategic tax benefits, or even for marketing strategy characteristics. In any case, we know how useful life to the defined time of duration that an intangible asset will have, which will be subject to identification, amortization and for the benefit of the company.

“The amortizable amount of an intangible asset should be allocated on a systematic basis over its estimated useful life, unless it has an indefinite life.“

Some primary sources mention the following concepts about intangible assets, which are of interest to students, interested parties and specialists in the field to consider and appropriate:

“A non-monetary asset that is manifested by its economic properties. It does not have a physical appearance but grants rights and economic benefits to its owner or to the holder of a share.
Source: International Valuation Standards Council GN4

“Non-physical assets such as franchises, trademarks, patents, intellectual property, goodwill, and contracts that grant rights and privileges, and represent value to the owner.”
Source: International Glossary of Business Valuation Terms (IGBVT)

How to recognize or identify an intangible?

The recognition of an intangible mainly suggests 4 questions or statements that we must consider:

Is identifiable – means that there is legal, contractual or registration substance to be able to transfer said asset, and in its case be able to have a benefit or transfer said rights and/or obligations to another entity. Intangible assets can be bought, sold, licensed or rented and are subject to private property rights, ensuring a legal basis for the transfer.
There are economic benefits.
The future economic benefits of the asset are controlled.
It is recognizable by a purchase acquisition, or its development phase has been concluded to be able to be marketed.

The assets that are internally incorporated and that are in the development phase are not annexable to the nature of amortization for a defined and indefinite life, they can only be recognized and accrued according to their existence and contributions for tax strategy purposes, and recognition for recognition purposes. however, they may not be amortized, nor may they be subject to impairment analysis.

Conceptualization and Recognition Diagram for the Appraisal of Intangibles: