Intangible assets are valuable resources a company owns that lack a physical form. Examples include patents, trademarks, copyrights, brand reputation, and customer relationships.

Traditional valuations struggle to assess intangible assets because they lack a clear market price. Intangible Valuation Reports employ specific methodologies to determine their economic value for accounting, financial reporting, or strategic decision-making.

The report considers various factors specific to each asset. For patents, this might include remaining life and licensing potential. Brand reputation might be assessed through surveys and market research. The report also considers the impact of these assets on a company’s future cash flow.

These reports offer transparency and accuracy in financial reporting, attracting investors, securing financing, and making strategic decisions. They are also instrumental in mergers and acquisitions, helping determine a fair value for intangible assets involved.

By providing a clear assessment of intangible asset value, these reports empower businesses to unlock the full potential of these valuable resources for financial reporting, strategic planning, and M&A transactions.

The initial valuation of an intangible asset is typically based on the cost incurred to acquire it. After initial recognition, the value of the intangible asset is reviewed for impairment annually. Impairment occurs when the carrying amount (book value) of the asset exceeds its recoverable amount. If impairment is identified, the carrying amount of the intangible asset is reduced to reflect its recoverable amount, resulting in an impairment charge on the income statement.

Goodwill, an intangible asset that arises from a business acquisition, presents a unique valuation challenge. IFRS dictates that goodwill is not amortized but is subject to annual impairment testing similar to other intangible assets.