Value judgments

摘要

The theoretical requirements of IFRS 3 and IAS 38, the new and revised standards on business combinations and intangible assets respectively, have been well documented (Accountancy, June, p82) but there has been little discussion on how these requirements will be followed in practice. The practical implications will require the acquirer to make judgments in identifying the acquiree's intangible assets and assessing each asset's useful life as well as applying the appropriate intangible valuation methodology. It is also worthwhile highlighting the fact that there are no strict industry benchmarks which can be applied to gauge what proportion of goodwill might be apportioned to intangible assets pursuant to an acquisition. Each and every company will have different intangibles of varying degrees of value. The valuation expert must consider whether the level of intangibles identified appears reasonable in the context of how that company's strengths and weaknesses are perceived in the marketplace.