What is intangible asset valuation?

What is the valuation of intangibles

Complies with the Financial Reporting Standards (NIF) issued by the Mexican Institute of Public Accountants (IMPC) and the Mexican Financial Reporting Standards Council, AC (CINIF), intangible assets are defined as those that are:

  • identifiable.
  • No physical substance.
  • Used for the production or supply of goods or provision of services that generate economic benefits.
  • That there is control over the benefits they provide.

In the updated definition, “used for the production or supply of goods or provision of services or for administrative purposes” was discarded and replaced with “non-monetary assets.” This, in addition to coinciding with the NIC-38, makes the definition more precise and makes it possible to use a more generic term. 

“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.”

Another approach and sources of what is an intangible asset 

Intangible assets can be bought, sold, licensed and rented and are linked to private property rights, this guarantees a legal basis for their transfer and any transaction related to them.

“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.

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.”

International Glossary of Business Valuation Terms (IGBT)

Intangible assets in companies

The valuation and knowledge of intangibles is one of the most important points for the valuation, gives a competitive advantage towards permanence and growth with respect to the sector or competition.

Most companies have more than half the value in their intangibles and have not measured it.

What intangibles do we value?

At ANEPSA we have a team of experts trained to carry out the valuation of intangible assets of all kinds (software, trademarks, patents, etc.), based on National and International Financial Reporting Standards.

Intangible assets are divided into four categories:

  1. market assets
  2. Intellectual Property Assets
  3. Human Assets
  4. Infrastructure Assets

And it is common to find them in:

  • brands
  • patents
  • Industrial Secrets
  • software
  • Commercial Credits
  • Other Intangibles

Depending on the company in question, we propose a series of steps according to Due Diligence and the search diagram for intangibles that are impacting the operational and economic value of the company in order to be able to value and identify them more accurately within the value. this.

Intangibles Valuation Methods

The valuation methods that are usually used to give value to intangibles are based on the market itself, however, the valuation requires the measurement of a financial value.

  • market price method
  • Income method or (EVA)
  • Valuation based on market position
  • Skandia Browser
  • cost method

Purpose of the Valuation of Intangibles

The purposes start and are developed according to the conceptualization of the objective, which may have similar but different motivations when applying a specific model to the valuation itself.

The main purposes of valuing an intangible can be listed in the following:

  • Accounting: expression and revelation. 
  • Legal: litigation, embargoes, lawsuits, commercial credit and liens.
  • Transfer prices.
  • Purchase – Sale or Transfer of Intangibles.
  • Intellectual Capital Management.
  • Financing.
  • Transaction between related parties.
  • Determine a real value of the patrimony.
  • Fusions and acquisitions.
  • Tax Guarantee.
  • Goodwill.

A valuation of intangibles It is necessary to know exact values of your assets, this avoids losses and helps to know the depreciation, contact us and we will help you with your appraisals.

Standards and Certifications

We follow the corresponding and current regulations. We have the necessary certifications to provide a reliable and comprehensive service.

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