What is Calculated Intangible Value?

A method of assigning a fixed value to a company's intangible assets that are not affected by changes in market value is calculated intangible value. Assets owned by a company that cannot be seen physically, such as trademarks, intellectual property and copyrights, a method of valuing assets of this nature is known as calculated intangible value. One of the methods that can be used to allocate a fixed value to intangible assets is by subtracting a firms book value from its market value. However, due to constant changes in the market value, using the above method is not an accurate way of allocating fixed value to intangible assets.

Back To: Real Estate, Personal, & Intellectual Property

How is Intangible Value Calculated?

Below is a highlight of the steps that can be followed when allocating a fixed value to intangible assets of a company;

• Calculate the firms assets and multiply by the Return on Assets (ROA) of the industry.
• Subtract the value from the pretax earnings of the firm. This result will give you a premium that can be attributed to intangible assets, then,
• Divide the premium you get by the cost of capital of the firm to realize the NPV.

Another method you can use is;

• Estimate a company's average pretax earnings for the past three years.
• Calculate the average year-end tangible assets for the past three years
• Calculate the company's ROA
• Calculate the average ROA of the industry for the three-year period.

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