Quantitative Easing (QE) and Asset Valuations

A physical asset, such as land, buildings, plant and machinery, vehicles or inventory. Under IAS 16 and FRS 102 Section 17, property, plant and equipment is carried at cost less depreciation or, where an entity adopts the revaluation model for a whole class of assets, at a revalued amount; land is not depreciated.

A valuation approach that estimates the value of a business by adjusting the book values of all assets and liabilities to their fair values, including the recognition of off-balance-sheet intangible assets that meet IFRS 3 or ASC 805 recognition criteria. The adjusted net asset method is primarily used for asset-holding companies, investment vehicles, and businesses where value resides primarily in the asset base rather than earnings capacity.

A non-physical asset that derives value from intellectual or legal rights, or from the competitive advantage it provides. Examples include brands, patents, software, customer relationships, data, organisational know-how, and human capital.

The proportion of a company's total assets or total investment that is attributable to intangible assets. A high intangible asset intensity — common in technology, pharmaceutical, and professional services firms — indicates that value creation is driven primarily by knowledge, data, and relationships rather than physical capital.

The total value of a company's or fund's assets minus its liabilities. For investment funds, NAV represents the per-share or per-unit value.

A charge applied in the Multi-Period Excess Earnings Method (MPEEM) to deduct the fair return earned by other assets that contribute to the cash flows being valued. Contributory asset charges ensure that the residual earnings attributed to the subject intangible asset are not overstated by stripping out returns earned by tangible assets, working capital, and other identified intangibles.

An intangible asset that meets the identifiability criteria under IFRS 3 or IAS 38, meaning it is either separable from the entity (can be sold, transferred, or licensed independently) or arises from contractual or legal rights. Identified intangible assets are recognised separately from goodwill in purchase price allocations.

A ratio measuring the efficiency with which a company uses its assets to generate revenue, calculated as revenue divided by total assets. A higher asset turnover indicates more productive use of the firm's asset base.

What are the main types of intangible assets?

IFRS 3 and ASC 805, the business combination standards, group intangible assets into five illustrative classes: marketing-related, customer-related, artistic-related, contract-based and technology-based. The list is not exhaustive.

What is the difference between tangible and intangible assets?

Tangible assets have physical form: land, buildings, machinery, vehicles and stock. Intangible assets have none: they are identifiable non-monetary assets such as patents, trade marks, software and customer contracts.

How does AI create intangible asset value for businesses?

AI creates intangible value by generating proprietary models, training data, algorithms, and automated workflows that improve efficiency, reduce costs, and create competitive moats that are difficult for competitors to replicate.