TANGIBLE AND INTANGIBLE ASSET VALUATIONS

Whether an asset is tangible or intangible, it should be subject to the rights of property.

For an intangible asset to qualify as property it should enjoy all the legal rights, benefits, and privileges of property. It should be subject to identification, legal existence and protection, right of private ownership that is legally transferable, have evidence of its existence, have been created at an identifiable time, and be subject to being destroyed.

In order to have economic value, the intangible asset should generate some measurable amount of economic benefit to its owner and enhance the value of the other assets with which it is associated.

Intellectual properties are intangible assets that enjoy special legal recognition and legal protection.

They are often categorized as:

1. Creative (trademarks, copyrights, computer software); or
2. Innovative (patents, industrial designs, trade secrets).

Most intellectual properties have a specified legal life and external commercialization opportunities.

Intangible assets are really all the elements of a business enterprise that exist in addition to monetary (i.e., working capital) and tangible assets (i.e., capital and/or fixed assets). Their existence is dependent on the presence, or expectation, of earnings. They typically appear last in the development of a business and disappear first in its demise.

Intangible assets may be categorized as follows:

1. Rights – such as contracts to receive goods and services at an advantageous price, franchises, contracts to sell goods and services profitably;
2. Relationships – such as assembled workforce, customer relationships, distributor relationships;
3. Grouped Intangibles – such as going concern value, goodwill; and
4. Intellectual Property – patents, trademarks, copyrights, and trade secrets or know-how.

Evans & Evans can easily address the value of your firm’s tangible and intangible assets appraisal needs. With many years of experience in such appraisals, valuations and assessments, we have real, practical expertise in quickly, reasonably, and accurately determining the value of your firm’s assets.

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