Thesimplestintangibleassetstovaluearethosethatattachto
a single product or product line and generatecash flows.
Theseassetsusuallyhavefinite lives,over whichthecash
flows have to be estimated, but they are qualitatively no
differentfrommanytangibleassetsthatgeneratecashflows
over finiteperiods. Inthis section,we willconsidera few
examples of such assets.
Trademarks, Copyrights, and Licenses
Trademarks,copyrights,andlicensesallgivetheownerthe
exclusiverighttoproduceaproductorprovideaservice.Asa
consequence,theirvalueisderivedfromthecashflowsthat
canbegeneratedfromtheexclusiveright.Totheextentthat
thereisa costassociatedwith production,thevaluecomes
fromtheexcessreturnsthatderivefromhavingtheexclusive
right.
Aswithotherassets,wecanvaluetrademarksorcopyrights
inoneoftwoways.Wecanestimatetheexpectedcashflows
fromowning theasset, attachadiscountratetothesecash
flows that reflects their uncertainty, and take the present
value,whichwillyieldadiscountedcashflowvaluationof
theasset.Alternatively,wecanattemptarelativevaluation,
whereweapplyamultipletotherevenuesorincomethatwe
believecanbe generated fromthe trademarkor copyright.
Themultipleisusuallyestimatedbylookingatwhatsimilar
assets have sold for in the past.
Inmakingtheseestimates,wearelikelytorunintoestimation
issues that are unique to these assets. First, we have to
considerthefactthatacopyrightor trademarkprovides us
with exclusive rightsfor a finiteperiod.Consequently, the