Software as intangible asset – evaluation models, use of qualitative and quantitative methods
In recent years, we have been able to experience the rapid development of digitalization, which in recent months has spread to the lives of almost every business, regardless of company size, due to the pandemic. Digitalization is constantly developing new and even newer business models, and their evaluation and connection to the business strategy can be helped with software and analysis. In this article we deal with the place and evaluation of software in the accounting statements. CONTROLLER INFO VIII. ÉVF. 2020. 2. SZÁM 53-58.
Software evaluation – as required by accounting law Software are typically included in non-current assets, including intangible assets. Intangible assets are such non-material assets that serve the business directly and permanently, beyond one year.
Within intangible assets, the legislator defines property rights as acquired perpetual rights that are not related to real estate and that do not belong to intellectual property. In the case of software, if we talk about a perpetual right of use, it is included in property rights. (Sztv. 25. § (6). In this case, we are entitled to use the software.
On the other hand, if the software is created by the company, so it receives copyright protection, in this case the software is registered in the books of the company, albeit among the intangible assets, but already among the intellectual products.
The legislator specifically names software products as copyrighted works. (Sztv. 25. § (7)) In addition to the base cases listed, the used software may need to be upgraded. If the development is not performed by the software producer, but by the user of the software, the development can only be carried out if permission from the software owner is obtained. The software itself is protected by copyright, so its development is subject
to a license, because after the development an intellectual product is created, so the lessee of the software must show it in its books not only as a property right, but also as an intellectual product.
In determining the value of intellectual property, costs incurred on the leased software that are directly related to the development of the software may be taken into account. (Sztv. 23. § (3))
ELNUSA, T. (2020): Valuation analysis of skill based asset company: Acquisition by PT. In Understanding Digital Industry: Proceedings of the Conference on Managing Digital Industry, Technology and Entrepreneurship (CoMDITE 2019), July 10-11, 2019, Bandung, Indonesia (p. 54). Routledge.
FREY, H., & OEHLER, A. (2014): Intangible assets in Germany. Journal of Applied Accounting Research. DOI: https://doi.org/10.1108/JAAR-07-2014-0068
GREEN, A., & RYAN, J. J. (2005): A framework of intangible valuation areas (FIVA). Journal of Intellectual Capital.
GREEN, A. (2007): Intangible assets in plain business language. Vine, Vol. 37 No. 3, pp. 238-248. https://doi.org/10.1108/03055720710825564
Fenyves, V. & Bács , Z. & Laurentiu , D. & Tarnóczi, T. (2018): SIGNIFICANCE AND POSSIBILITIES OF MEASURING INTELLECTUAL CAPITAL BASED ON ACCOUNTING STATEMENTS ECONOMICS & WORKING
CAPITAL 2018 : 1-2 pp. 47-53.
HALL, B. H., & MACGARVIE, M. (2010): The private value of software patents. Research Policy, 39(7), 994-1009.
HITCHNER, J. R. (2010): Financial Valuation,+ Website: Applications and Models (Vol. 545). John Wiley & Sons.
IFRS Foundation, IAS38 (2014)
LEDOUX, M. J., & CORMIER, D. (2013): Market assessment of intangibles and voluntary disclosure about innovation: the incidence of IFRS. Review of Accounting and Finance.
LEV, B., & SRIVASTAVA, A. (2019): Explaining the demise of value investing. Available at SSRN 3442539.
MACBETH, J. D., & MERVILLE, L. J. (1979): An empirical examination of the Black Scholes call option pricing model. The journal of finance, 34(5), 1173-1186.
MATSUURA, J. H. (2004): An Overview of Intellectual Property and Intangible Asset Valuation Models. Research Management Review, 14(1), 33-42. https://files.eric.ed.gov/fulltext/ EJ1070348.pdf
PÉTER, K. (2006): A szellemivagyon-értékelés elméleti és gyakorlati módszerei. Iparjogvédelmi és szerzői jogi szemle, III. évf, 4.
PUCA, A., ZYLA, M. L. (2019): The Intangible Valuation Renaissance: Five Methods, Enterprising Investor, Access: https://blogs.cfainstitute.org/investor/2019/01/11/a-renaissance-inintangible-valuation-five-methods/, Access date: 2019.12.10.
SUDARSANAM, S., SORWAR, G., MARR, B. (2003): Valuation of Intellectual Capital and Real Option Models
SULLIVAN, P. (2000): Value-driven Intellectual Capital: How to Convert Intangible Corporate Assets into Market Value, John Wiley & Sons, New York, NY.
STAROVIC, D., & MARR, B. (2003): Understanding corporate value: managing and reporting intellectual capital. CIMA.
STEWART, T. A. (2010): Intellectual Capital: The new wealth of organization. Currency.
TRUGMAN, R. G., CPA/ABV, MCBA, ASA, MVS (2017): Understanding Business Valuation, American Institute of CPAs
VAN DEN BERG, H. A. (2003): Models of intellectual capital valuation: a comparative evaluation.
VAREMÆRKESTYRELSEN, P. O. (2000): Management and evaluation of patents and trademarks. Ernst & young and Ementor Management Consulting.
WIRTZ, H. (2012): Valuation of intellectual property: A review of approaches and methods. International Journal of Business and Management, 7(9), 40.
2000. évi C. törvény a számvitelrôl/ Act C of 2000 on Accounting