Intangible assets

While the book value of a company is determined by the material assets, such as plant, machinery, inventories (and of course by the debts), other "values" not covered by traditional accounting contribute to the company's market value. They are known as intangible old or intangible assets (intangible assets or intangibles for short).
Particular attention was paid to intangible goods due to the apparent differences between the market and book values of listed companies. The unusually high share prices of biotech companies and internet companies (so-called dot.coms) in 1998 and 1999 encouraged the discussion about the difference between market and book values. A traditional balance sheet analysis could often not explain the high market values, because the companies of the New Economy have few material assets. Instead, their business plans are based solely on the deployment of intellectual capital, that is, on intangibles such as patents, the quality of management, and the opportunities that seemed tangible with the new markets.

Intangible goods include: patents, licenses, goodwill, brands, research results, product developments, software, databases with customer data, and similar items and items that can only be activated under special circumstances.

Modern accounting, such as the International Accounting Standards (IAS), distinguishes between acquired (derivative) and self-created (original) intangible goods. While derivative intangible goods may be accounted for if they generate a measurable benefit for the accounting company, stricter criteria apply to original intangible goods. You need to:

· Be individually identifiable and generate measurable benefits over several years

· Their production costs must be individually measurable and the resources required for completion and marketing should be available to the company
The evaluation of the intangibles required for activation is problematic. Since there is seldom a liquid market for intangible goods, an attempt is made in practice to use the DCF method. However, the required forecast of future cash flows and growth rates is fraught with great uncertainty, especially with intangibles.

Neuerdings wird auch der Ansatz der Real options als Bewertungsmethode versucht. Unter dem Gesichtspunkt der Option werden Intangibles ein Wert zugewiesen. Der Punkt dabei ist, daß Optionen um so wertvoller sind, je höher die Unsicherheit ist. Wer hinter einem Geschäftsplan einer Unternehmung einen Optionscharakter erkennt, oder Vermögenspositionen sieht, die Optionscharakter aufweisen, wird daher zu dem Schluß kommen, daß diese Unternehmung bei größerer Unsicherheit und bei Wandel des Umfeldes einen höheren Wert hat, während traditionelle Unternehmen (Old Economy) mit einer Zunahme der Unsicherheit und des Wandels in der Welt an Wert verlieren. Der Wert dieser Optionen kann kaum analytisch durch eine Formel ermittelt werden, aber es werden Simulationsmodelle eingesetzt.

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Further explanations for the first letter I.