9/25/2023 0 Comments Similar cost principle real estateAssisting the client (or client’s counsel) with taxation planning, compliance, and controversy (including income, gift and estate, and property taxation).Assisting the client with regulatory compliance.Concluding a sale (or other transfer) transaction pricing determination. These situations can generally be grouped into the following categories: There are various situations in which an analyst may develop and report intellectual property-and other intangible personal property-valuations. This discussion is presented in four parts: Part I of this discussion focuses on the conceptual principles that support the application of the cost approach to intellectual property valuation Part II describes the generally accepted cost approach valuation methods Part III describes the practical measurement procedures related to intellectual property cost metrics and obsolescence metrics and Part IV presents several illustrative examples of the application of the cost approach in hypothetical intellectual property valuation scenarios. Therefore, this discussion focuses on the conceptual principles and the practical applications of the cost approach in the development of intellectual property valuations. However, these analysts (and their clients-and their clients’ legal counsel) often have less experience and expertise about the application of cost-based valuation methods and procedures. Typically, analysts have experience and expertise regarding the generally accepted income-based and market-based intellectual property valuation methods and procedures. It is noteworthy that most of the valuation methods and procedures-and the illustrative examples-included in this discussion are also applicable to other categories of general intangible personal property.Īnalysts typically apply income approach and market approach valuation methods in the development of (and in the reporting of) intellectual property valuations. This discussion encompasses all four categories of intellectual property. Also, analysts may be asked to measure damages related to intellectual property related to a breach of contract claim or an infringement (or other tort) claim.įor purposes of this discussion, the term intellectual property includes the following four categories of intangible property: patents, trademarks, copyrights, and trade secrets. Analysts may be asked to estimate an arm’s-length price (or royalty rate) of intellectual property for taxation, corporate accounting, or license negotiation reasons. Analysts may be asked to estimate the fair market value-or some other standard of value-of intellectual property for any of the above-mentioned reasons. These reasons include the pricing and structuring of sale and license transactions, income tax and property taxation planning and compliance, fair value measurements for financial accounting, corporate strategic planning, forensic analysis and dispute resolution, and many other reasons.
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