This Site Requires Javascript
Burger Menu

Calculated Intangible Value (CIV)

Calculated Intangible Value (CIV)

What is 'Calculated Intangible Value - CIV'

A method of valuing a company's intangible assets. This calculation attempts to allocate a fixed value to intangible assets that does not change according to the company's market value. Examples of intangible assets include brand equity and proprietary technology.

Explaining 'Calculated Intangible Value - CIV'

Usually a company's intangible assets are valued by subtracting a firm's book value from its market value. However, opponents of this method argue that because market value constantly changes, the value of intangible assets changes also, making it an inferior measure. Finding a company's CIV involves seven steps:

1. Calculate the average pretax earnings for the past three years.
2. Calculate the average year-end tangible assets for the past three years.
3. Calculate the company's return on assets (ROA).
4. Calculate the industry average ROA for the same three-year period as in Step 2.
5. Calculate excess ROA by multiplying the industry average ROA by the average tangible assets calculated in Step 2. Subtract the excess return from the pretax earnings from Step 1.
6. Calculate the three-year average corporate tax rate and multiply by the excess return. Deduct the result from the excess return.
7. Calculate the net present value of the after-tax excess return. Use the company's cost of capital as a discount rate.


Calculated Intangible Value (civ) FAQ

Can you sell intangible assets?

Intangible assets are non-physical, but can be identified. Have a thought about a company's proprietary technology (computer software, etc.), copyrights, patents, licensing agreements, and website domain names. ... It's possible to buy and sell Intangible assets on its own.Aug 17, 2020

What does intangible value mean?

In accounting, it refers to the non-physical value of an asset. An example is patents and brand recognition, which increases the value of a company. Sometimes, intangible assets are excluded from a company's valuation. ...

What is the most common valuation method used for intangible assets?

Three general approaches are used to value any asset. They are (1) the cost approach, (2) the market approach, and (3) the income approach. Mar 28, 2010

How do you value intangible assets on a balance sheet?

Intangible assets are only recorded on a balance sheet if they are acquired and with an identifiable value and tangible lifespan that can thus be amortized. Generally accepted accounting principles (GAAP) lists the accounting guidelines. May 29, 2018

How do you find intangible assets?

Determine the overall value of a company's intangible assets by subtracting the company's book value [assets minus liabilities] from its market value. That's the value of the intangible assets. However,each intangible asset can be valued independently.Jun 27, 2019

What are the difficulties in valuation of intangible assets?

Valuation Problems It can be difficult to price Intangible assets. To make things more difficult, the technology related to intangible assets not generating income may be too new to properly evaluate how profitable it can be for its owner or the upper hand it gives.

Further Reading

Measurement and management of intellectual capitalMeasurement and management of intellectual capital
hrcak.srce.hr [PDF]
… This is done by calculating the three-year average corporate tax rate and then subtracting this … 7. Calculate the net present value of the after-tax excess return … Aho, S., Ståhle, P. and Ståhle, S. (2011a), “Critical analyse of the Calculated Intangible Value (CIV) method”, paper …

Intellectual Capital and the Creation of Value in Brazilan CompaniesIntellectual Capital and the Creation of Value in Brazilan Companies
papers.ssrn.com [PDF]
… This is done by calculating the three-year average corporate tax rate and then subtracting this … 7. Calculate the net present value of the after-tax excess return … Aho, S., Ståhle, P. and Ståhle, S. (2011a), “Critical analyse of the Calculated Intangible Value (CIV) method”, paper …

Intangibles and performance in oil and gas industryIntangibles and performance in oil and gas industry
www.emerald.com [PDF]
… This is done by calculating the three-year average corporate tax rate and then subtracting this … 7. Calculate the net present value of the after-tax excess return … Aho, S., Ståhle, P. and Ståhle, S. (2011a), “Critical analyse of the Calculated Intangible Value (CIV) method”, paper …

A critical assessment of Stewart's CIV methodA critical assessment of Stewart's CIV method
www.emerald.com [PDF]
… This is done by calculating the three-year average corporate tax rate and then subtracting this … 7. Calculate the net present value of the after-tax excess return … Aho, S., Ståhle, P. and Ståhle, S. (2011a), “Critical analyse of the Calculated Intangible Value (CIV) method”, paper …

Relationship between intellectual capital with productivity and market value added in Tehran Stock ExchangeRelationship between intellectual capital with productivity and market value added in Tehran Stock Exchange
www.inderscienceonline.com [PDF]
… This is done by calculating the three-year average corporate tax rate and then subtracting this … 7. Calculate the net present value of the after-tax excess return … Aho, S., Ståhle, P. and Ståhle, S. (2011a), “Critical analyse of the Calculated Intangible Value (CIV) method”, paper …


Tags

intangible, assets, calculated, asset, company, capital, financial, market, business, book, method, tangible, calculate, intellectual, equity, valuation, investment, intangibles, economic, company’s, return, spread, firm, based, total, model, definition, present, cost, companies, property, post, earnings, income, physical, performance, fair, goodwill, average, stewart, evaluation, amortization, benefits, meaning, perpetuity
Section 508

WCAG 2.0

Section 508