Regarding whether the payments created an intangible asset
, the IRS noted that the taxpayer did not create, originate, enter into, renew, or renegotiate any agreement with the target.
It is also important to determine to what extent intangible assets
It would seem that the profession is still searching for the most cost-efficient way to faithfully reflect this intangible asset
in the financial statements.
The following are a few examples of intangible assets
that are considered as passive income generators - computer software, patents, copyrights, licenses, franchises, trade-marks and goodwill.
In spite of the accounting rules that establish generally accepted criteria regarding the measurement, recognition and disclosure of these intangible assets
, the literature points out that subjective factors could come into play, permitting that their value to be manipulated easily, especially for so-called intellectual capital.
This is because under the regulations, there is an expanded view of what comprises intangible asset
ASUs 2011-08 and 2012-02 provide entities the option to qualitatively assess events and circumstances relevant to the fair value of a reporting unit or indefinite-lived intangible asset
to determine whether a quantitative test is required.
Calculate the return on intangible assets
by dividing the net income (from the income statement) by the intangible asset
value found in Step 2.
We show that the transition to IAS/IFRS did not change the overall amount of intangible assets
, even though it operated substitution effects in favour of goodwill.
Kenan Patrick Jarboe and Roland Furrow, Intangible Asset
Monetization: The Promise and the Reality, Athena Alliance Working Paper 03 (Washington, DC: Athena Alliance, April 2008), http://www.athenaalliance.org.
Except reduction of tangible assets in value, another trend is that the production is mostly based on such intangible assets
(IA) as knowledge, know-how, creativity and others.
The valuation analyst will identify the right marketplace for relevant information and reconcile his findings with the intangible asset
to assess the value.