One method to determine the market value of Intellectual Property assets like patents, trademarks, and copyrights is to use IFRS 13 Relief from royalty method (also known as Royalty avoidance approach or Royalty Relief approach). This approach determines the value of Intellectual Property assets by estimating what it would cost the business if it had to purchase the Intellectual Property (IP) it uses from an outsider. Other valuation methods are provide here.
This approach requires the valuator to
- project future sales of the products that use the technology,
- determine an appropriate reasonable royalty rate, and
- determine either a present value factor or an appropriate discount rate.
The result is the present value of the Intellectual Property to the company. … Read more