Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available.
IFRS 13 defines fair value as ‘The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.’ [IFRS 13 9]. The key principle is that …Read More
The below illustrative disclosures are limited to financial assets and liabilities measured in accordance with IFRS 9. In many cases, insurers may have other balances that require fair value measurement disclosures in accordance with IFRS 13.
|IFRS 13 73|
One method to determine the market value of Intellectual Property assets like patents, trademarks, and copyrights is to use the royalty avoidance approach (also known as Relief from royalty or Royalty Relief). 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 …Read More
A controlling interest can change the capital structure. When valuing a controlling interest, the valuator will generally (subject to the valuator’s purpose and standard of value) base the weighted average cost of capital (WACC) on the optimum capital structure or the average industry capital structure. In most cases, the optimum capital structure and the average …Read More
The Capitalisation of Earnings Method is an income-oriented approach. This method is used to value a business based on the future estimated benefits, normally using some measure of earnings or cash flows to be generated by the company. These estimated future benefits are then capitalized using an appropriate capitalization rate. This method assumes all of the assets, both tangible …Read More
When determining if a customer relationship asset exists, one should consider several elements that create that intangible asset.
For a customer relationship asset to exist, it should have an informational component or factual information about the customer that is important and useful to the company.
This information may include such attributes as name, address, telephone number, email address, …Read More
The with and without method is used to separate one intangible asset with a significant value from other intangibles. For example in case of the bringing new technology to the market, the value of the new technology can be estimated as follows:
Value of the (existing) business with new technology
Value of the (existing) business without new technology, where …Read More
The ‘Royalty Relief’ (also known as Relief from Royalty) method is based on the notion that a brand holding company owns the brand and licenses it to an operating company. The notional price paid by the operating company to the brand company is expressed as a royalty rate. The Net Present Value (NPV) of all forecast royalties represents the value of …Read More
THE CASE: Shockwave Corporation