To understand this one, you'll need to know what an intangible asset is...this is something that is not physical but has some value. You might think this sounds very spiritual, like we're talking about the soul. Kind of, only in a business sense. Intangible assets include things like goodwill, reputation, brand value, patents or intellectual property.
The CIV method is trying to assign a value to those things. As you can imagine, there is no Kelly Blue Book to look up goodwill or reputation value. So it can be tricky.
The process can be done by simply finding the market value and subtracting the book value from it. But, market values can change, so some experts argue this may not be accurate. Below is a detailed step by step calculation method that works around moving market values. It might be a bit detailed for the average layperson, but it gives an idea of the pieces involved.
Related or Semi-related Video
Finance: What is Brand Equity?3 Views
Finance allah shmoop what is brand equity Okay wait That's
brand equity high fiber yet not relevant Friend equity is
the value your brand carries Like how people feel about
it Do they love it Aided fear it recognize it
Do they need to be told to go out and
buy it Or do they just order that ford truck
without being prompted ninety seven times between penalty flags and
dealings at football games Well brand equity is usually linked
to a few things like one the number of people
who have heard of your brand e known has ever
heard of your brand Well a then you might not
have one to how much people respect and like your
brand If people hate your brand well you might have
negative brand equity For example al qaeda brand aspirin probably
would not do so well at least in america Three
your brand reputation hi brand equity is a name you
recognize easily and like or trust and that might be
something like a bmw or disney or pampers if you're
still on the road two continents and for how readily
your brand is recognized Yeah shmoop anyone uh we recognized
yet are we almost a brand We're trying Ok quick
quiz to see if you were paying attention What was
number two Right to shake Get out of
Up Next
What are Fixed Assets, Tangible Assets and Intangible Assets? Fixed assets are long term, illiquid assets that are necessary for a company’s oper...