Under certain circumstances, GAAP or IFRS require that intangible assets be included in a company’s financial statements. As a significant element of any company’s balance sheet, intellectual property and intangible assets can greatly enhance the total value of a company.
The primary reason intangible assets end up on the balance sheet is through the allocation of value arising from purchases of assets or entity combinations. With years of relevant experience, IPmetrics professionals can assist in the recognition, designation and valuation of patents, trademarks, copyrights and other intangible assets acquired via purchase or merger.
Once they are on the balance sheet, all intangible values reported are subject to impairment adjustments over time. The potential decline in value must be tested regularly to ensure prompt reporting of such adjustments. When you need competent and professional valuation services, IPmetrics can help.
The implementation of a purchase price allocation is typically conducted in accordance with the Financial Accounting Standards Board's (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 141 (revised 2007), Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets. Outside the United States, the International Accounting Standards Board governs this process through the guidance found in IFRS 3.
FASB SFAS 157 (also known as ASC 820 in the updated FASB Codification) 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.” This principle is applicable to intangible assets as well, and is increasingly important for the proper reporting of company values.