Intellectual or Intangible Asset Valuation

Brandname, trademark, patent, using right, domain name, customer relationship, contract, software, database

Accounting ：

Separately acquired intangible assets
Record at cost, comprises (a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; and (b) any directly attributable cost of preparing the asset for its intended use.

Acquisition as part of a business combination
In accordance with IFRS 3 Business Combinations, if an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date.

Acquisition by way of a government grant
In accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, an entity may choose to recognise both the intangible asset and the grant initially at fair value. If an entity chooses not to recognise the asset initially at fair value, the entity recognises the asset initially at a nominal amount (the other treatment permitted by IAS 20) plus any expenditure that is directly attributable to preparing the asset for its intended use.

Exchanges of assets
The cost of such an intangible asset is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired asset is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired asset is not measured at fair value, its cost is measured at the carrying amount of the asset given up.

Internally generated intangible assets
Only an “intangible asset at development phase” can be recorded as intangible asset at sum of expenditure incurred.

Accounting ：

If an initial recognition of intangible assets at amounts other than cost, revaluations shall be made with such regularity that at the end of the reporting period the carrying amount of the asset does not differ materially from its fair value.

Royalty Relief Method, Multi-Period Excess Earning Method:

Asset type - Brand name, Trade mark

Multi-Period Excess Earning Method:

Asset type - Patent, Technology know-how, Domain Name

Multi-Period Excess Earning Method:

Asset type - Customer Relationship

Income Difference Approach:

Asset type - Purchase or Supply Contract, Non-Competition Agreement, Leasing Agreement

Multi-Period Excess Earning Method, Income Difference Approach:

Asset type - Software, Recipe, Database

Intangible asset:

must include all following:
1. an identifiable non-monetary asset without physical substance.
2. a resource controlled by an entity as a result of past events.
3. a resource from which future economic benefits are expected to flow to the entity.

Identifiability:

An asset is identifiable if it either:
(a) is separable, ie is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or
(b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Internally generated goodwill:

Goodwill is not an intangible asset

Intangible asset arising at development phase:

Demonstrate all of the following:
(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale.
(b) its intention to complete the intangible asset and use or sell it.
(c) its ability to use or sell the intangible asset.
(d) how the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
(e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
(f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.