REPLY Valuation of intangible assets (SD6657)

[SDMAIL Jean-Jacques Laublé]

Posted by  Jean-Jacques Laublé <jean-jacques.lauble at wanadoo.fr>

Hi Richard.

If it was possible to include SD in the process of this obligatory method,
it would give the method a new recognition.

I have always been interested by the problem of valuating a business.
I have more than 20 years ago, built a program that calculated automatically
results calculated by a double entry book keeping into a triple entry system that takes into
account the depreciation of the money and calculate results in current
currency instead of valuating with historical values represented by an
aggregate of multiple different values.

I took a quick look at IFRS3 definition because I was really curious how
book keepers could valuate intangible assets which is conceptually at the opposite of the
traditional book keeping method.
It seems that one of the main feature of the system, is that the only
intangible assets that are considered must be separable: it must be possible
to sell them, to rent them, to licence them etc.
It is then easier for accountants to value them, eventually on the basis of
precedent transactions etc.
And I still wonder how they will do that precisely.

Having frequented accountants for more than 30 years, I know their mentality
and I know that what they hate is imprecision. There is no confidence
interval and probability in book keeping and the method is strictly based on
historical data.
The good will has nothing to do with book keeping.

This being considered, SD is supposed to include it its models, all the
intangible assets separable or not.
Kim Warren a specialist of intangible resources mentions for instance in
competitive strategy dynamics the intangible resources for a retail bank
pages 21; quality of retail branches, staff skills, customer-base quality,
product features, information systems quality.

All these resources cannot be sold, rented, licensed or franchised.
Eventually the product features and information systems, but not the staff
skills or the quality of retail branches and with difficulty the
customer-base quality (eventually through a franchising system).
> From an SD point of view all the intangible assets must be included in the
modelling process, separable or not. The ISFR3 considering only the
separable assets, will credit them the totality of the added value, ignoring
the other intangibles. How is it possible?
Regards.
Jean-Jacques Laublé Eurli Allocar
Posted by  Jean-Jacques Laublé <jean-jacques.lauble at wanadoo.fr>
posting date  Thu, 27 Sep 2007 15:05:41 +0200