Vietnam: How to estimate the remaining economic life of an intangible asset?

According to Vietnam’s current regulations, intangible asset refers to an asset that lacks physical substance and is capable of creating economic rights and benefits.

Intangible assets referred to in the Valuation Standard No. 13 – Valuation of intangible assets promulgated together with Circular No. 06/2014/TT-BTC of the Ministry of Finance of Vietnam shall simultaneously satisfy following requirements:

- No physical form; however, an intangible asset may contain some physical substance which value is not considerable versus that of the intangible asset;

- Perceivable and has tangible evidence of its existence (for example: contracts, certificates, registration documentation, computer discs, list of clients, financial statements…);

- Capable of generating incomes for its owners;

- Value of an intangible asset is quantifiable.

Remaining economic life of an intangible asset shall be used in all the approaches to valuing intangible assets.

Remaining economic life of an intangible asset shall be affected by legal, economic and technological factors such as market scale and prospect, scientific and technological development, sophistication level of the intangible asset, competition from similar intangible assets…Following elements should be considered for the estimation of remaining economic life:

- Duration of protection by Law for an intangible asset as intellectual property right;

- Provisions of the civil contract in association with to-be-valued assets according to laws;

- Decisions made by the court or competent agencies on to-be-valued assets;

- Economic factors such as scale and prospects of the market for products and services in association with to-be-valued assets;

- Scientific and technological developments, new introduction of similar or better patents that result in functional and economic obsolescence of to-be-valued assets; other relevant scientific and technical elements;

- etc.

View more details at Circular No. 06/2014/TT-BTC of the Ministry of Finance of Vietnam, effective from February 21, 2014.

- Thu Ba -

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