Valuation of Intangible Assets

This chapter presents a theoretical and practical overview of intangible assets and their valuation. Intangible assets are the codified physical descriptions of specific knowledge that can be owned and readily traded. Separability and transferability are fundamental prerequisites to the meaningful recognition and measurement of intangible assets. The chapter discusses the changes in regulatory requirements leading to the identification and measurement of intangibles, and describes the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC or Codification), which incorporates Statement of Financial Accounting Standards (SFAS) 141R and SFAS 142, and the treatment of in-process research and development (IPR&D). A detailed case study on a business combination accounted for using the acquisition method, including the valuation of intangible assets and goodwill, is presented.