The valuation analysts use numerous approaches in order to reach a reasonable indication of a defined value for the subject intangible assets on a certain date which is referred to as the valuation date. The most common approaches to estimate the fundamental or fair value of the intellectual property are defined as the following:
1. Cost Approach: The cost approach is based on the economic principle of subs ution. This principle states that an investor will pay no more for an asset than the cost to obtain, by purchasing or constructing, a subs ute asset of equal utility. There are several cost approach valuation methods, the most common being the historical cost, replacement cost, and replication cost.
2. Market Approach: The market approach is based on the economic principle of compe ion and equilibrium. These principles conclude that, in a free and unrestricted market, supply and demand factors will drive the price of an asset at equilibrium point. Furthermore, it provides an indication of the value by comparing the price at which similar property has exchanged between willing buyers and sellers.
3. Income Approach: This approach estimates the fair value of intellectual property by discounting the future economic benefits of ownership at an appropriate discount rate.
4. Direct Approach: The direct approach is based on the current value of shares of intellectual property in an Intellectual Property (IP) Share Market. [1]
5. Compe ive Advantage Valuation[2]
http://en.wikipedia.org/wiki/Intelle...erty_valuation