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Intangible Assets: Valuation and Economic Benefit

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This book provided valuable methods of trying to value intangible assets. It shows three main approaches to value such assets, the cost approach, the market approach and the income approach. It then goes through each of the three methods in detail with adequate examples. It also goes beyond the three approaches to discuss some of the features of intangible assets and how they relate to a firm. Using the income approach it showed how you using the present value of an income stream can tell you the value of an intangible asset. Using the cost approach you could use either the replacement costs of an identical or equivalent intangible asset. Using the market approach you would find a market for such intangible assets and then make adjustments to the value of your asset as necessary. I believe this book is valuable to accountants but in more of a theoretical way. This is because under current GAAP the majority of intangible assets cannot be put on the balance sheet. There are however three main limitations to this book. The first limitation is the fact that it does not talk about classifications and definitions of the different types of intangible assets. The second limitation is the fact that it did not use examples of how to value hard to value intangible assets such as a loyal workforce. The third and last limitation is the fact that it did not talk about what types of assets might be very difficult if not impossible to value or the difficulties of valuing the different intangible assets.

This book gives a good overview on intangible asset valuation