Question

Explain how intangible assets may pose a significant valuation problem. Does the determination of useful life for an intangible asset pose a valuation problem? Explain

Answer 1

Intangible assets are assets without physicl substance. They have economic value because of the rights they confer on the holder of intangible assets. They can pose some problems in valuation as there is significant unceratinity as to the value of future benefits from the intangible asset. Useful life can be estimated for a finite intangible assets using accounting, legal, regulatory, cntractual and competitve factors. They take in to account the effects obsolence, demand and technological advances.