Hi,
| Asset | Primary | Secondary | Tertiary | |
| Patents | Income | Market | Cost | |
| Technology | Income | Market | Cost | |
| Copyrights | Income | Market | Cost | |
| Internally developed | Cos | Market | Income | |
| Brand names | Income | Market | Cost | |
| Customer relations | Income | Cost | Market | |
Can anyone please confirm the valuation of intangible assets is already prevalent like above for IndAS?
Txs.
Hey Yasaswi! Your table is a nice start for classifying intangible asset valuation under Ind AS.
To clarify, Ind AS 38 - Intangible Assets provides guidance on recognition and measurement but does not prescribe a fixed valuation method like Income, Market, or Cost approach for specific types of intangibles. Instead, the valuation depends on the nature of the asset and available evidence.
Here’s a quick breakdown on valuation approaches generally accepted under Ind AS 38:
| Intangible Asset | Common Valuation Approach(es) |
|---|---|
| Patents | Income approach (based on future cash flows), Market approach (if comparables exist), or Cost approach |
| Technology | Income, Market or Cost approach - depending on circumstances |
| Copyrights | Similar to patents, often Income or Cost approach |
| Internally Developed | Usually Cost approach (development cost capitalized), sometimes Income approach if reliable cash flows can be estimated |
| Brand Names | Usually Income approach (royalty savings method or excess earnings) or Market approach (comparables) |
| Customer Relations | Cost approach or Income approach (based on projected earnings from customer base) |
Income approach is widely used for valuation of intangible assets expected to generate economic benefits (e.g., brand names, customer relations, patents).
Market approach is used when there are active markets or comparable transactions.
Cost approach is often used for internally developed assets or when cost reflects fair value better (e.g., development costs).
Ind AS doesn’t mandate fixed valuation methods per asset type.
The choice depends on the facts, circumstances, and professional judgment.
Disclosures about valuation method used are essential.
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