From the following information determine the possible value of brand : Profit After Tax (PAT) ₹ 2,000 (in lakh) Tangible Fixed Assets ₹ 8,000 Identifiable intangible assets other than the brand ₹ 1,200 Weighted average c

CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2018
From the following information determine the possible value of brand : Profit After Tax (PAT) ₹ 2,000 (in lakh) Tangible Fixed Assets ₹ 8,000 Identifiable intangible assets other than the brand ₹ 1,200 Weighted average cost of capital 15% Normal return on tangible assets 20% Capitalisation factor for intangible assets 25%

Answer & Explanation:

Calculation of possible value of brand (₹ in lakh) Profit after tax (PAT) 2,000 Less : Profit allocated to tangible assets (20% of ₹ 8,000) 1,600 Profit allocable to intangible assets including brand capitalization factor = 25% 400 Capitalised value of intangible assets including brand (400/25×100) 1,600 Less : Identifiable intangible assets other than the brand 1,200 Value of the brand 400 Hence, value of the brand = ₹ 400 lakh

Topics: Valuation

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