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Intellectual property valuation is a process to determine the monetary value of intellectual property assets. IP valuation is required to be able to sell, license, or enter into commercial arrangements based on IP. It is also beneficial in the enforcement of IP rights, for internal management of IP assets, and for various financial processes.
Intellectual property refers to intangible assets such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property rights include copyrights, trademarks, patents, industrial design rights, trade dress, and in some jurisdictions, trade secrets.
Intangible assets are typically expensed according to their respective life expectancy. [2] [7] Intangible assets have either an identifiable or an indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, [10] whichever is shorter. Examples of intangible ...
In tax law, amortization refers to the cost recovery system for intangible property.Although the theory behind cost recovery deductions of amortization is to deduct from basis in a systematic manner over an asset's estimated useful economic life so as to reflect its consumption, expiration, obsolescence or other decline in value as a result of use or the passage of time, many times a perfect ...
Goodwill and intangible assets are usually listed as separate items on a company's balance sheet. [ 4 ] [ 5 ] In the b2b sense, goodwill may account for the criticality that exists between partners engaged in a supply chain relationship, or other forms of business relationships, where unpredictable events may cause volatilities across entire ...
Intangible property is used in distinction to tangible property. It is useful to note that there are two forms of intangible property: legal intangible property (which is discussed here) and competitive intangible property (which is the source from which legal intangible property is created but cannot be owned, extinguished, or transferred).
In the UK, IP has become a recognised asset class for use in pension-led funding and other types of business finance. However, in 2013, the UK Intellectual Property Office stated: "There are millions of intangible business assets whose value is either not being leveraged at all, or only being leveraged inadvertently". [46]
When the purchaser of an intangible asset is allowed to amortize the price of the asset as an expense for tax purposes, the value of the asset is enhanced by this tax amortization benefit. [1] Specifically, the fair market value of the asset is increased by the present value of the future tax savings derived from the tax amortization of the ...