Vietnam: Market approach to valuing intangible assets

Market approach is one of the 03 approaches to valuing intangible assets. So, how is the market approach guided?

Pursuant to 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, market approach to valuing intangible assets is specified as follows:

1. Content of market approach:

- Value of to-be-valued asset is determined on the basis of comparison and analysis of information of similar intangible asset with prices currently being transacted in the market.

- Select and scrutinize characteristics, similarities of the intangible asset in comparison with the to-be-valued intangible asset, specifically:

+ Intangible asset ownership-related rights;

+ Financial provisions on sale, purchase or transfer of right to enjoyment;

+ Areas and industries for which the intangible asset is being used in;

+ etc.

- Valuers shall employ at least three similar intangible assets for comparison. In case only information from two similar intangible assets being currently transacted in the market is collected, results of market approach-based valuation shall be used only for inspection and comparison with valuation results from other approaches.

2. Reference information for application of market approaches:

- Successful transaction prices, offer prices, bid prices … of intangible assets similar to the to-be-valued asset.

- Locations and market conditions at the time of transaction, buyers and sellers’ motives, payment terms as well as other transaction-related matters.

- Necessary adjustment rate for prices and adjustment coefficient to reflect differences between to-be-valued asset and similar intangible assets.

3. Cases of application of market approaches:

- When information about similar intangible assets being transacted or with right to enjoyment being transferred or having transaction markets is available;

- When comparison with results of other approaches is required.

- 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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