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Finance Intellectual Property Has Become Research Paper

Yet, it is difficult to quantify the true value of intellectual property. In theory, the value of intellectual property derives from the degree to which the firm can convert that property into wealth. In some cases -- pharmaceutical patents, for example -- this can be relatively easy to calculate. In other cases -- the good vibes consumers get from seeing the Geico gecko -- quantification becomes more challenging. Yet that gecko character does have value for the insurance company, and if the character was licensed to another firm there would be a high cost attached. Kossovsky (2002) proposed a valuation method for IP loosely based on the Black-Scholes model of option pricing, and the FASB has also issued guidelines with respect to IP valuation. Yet in practice, valuing IP remains one of accounting's dark arts.

Prior to the mid-1990s, there was little consideration for the value of intellectual property. Firms defended their IP, but did not have strong mechanisms for its valuation, and did not view IP as an essential...

It is only since the move away from a manufacturing-based economy and towards an information-based economy that IP valuation has become more an issue. Once IP was recognized as the most important source of sustainable competitive advantage, firms began to look for ways to adequately value IP. This trend has continued, to the point where today the value of some firms depends entirely on IP, even when that IP is of the type whose value is difficult to quantify.
Works Cited:

Bettiol, M. (2010). HP CEO says he didn't buy Palm for smartphones. BGR. Retrieved April 9, 2011 from http://www.bgr.com/2010/06/02/hp-ceo-says-he-didnt-buy-palm-for-smartphones/

Kossovsky, N. (2002). Fair value of intellectual property: An options-based valuation of nearly 8000 intellectual property assets. Journal of Intellectual Capital. Vol. 3 (1) 62-70.

Rivette, K. & Kline, D. (2000). Discovering new value in intellectual property. Harvard Business Review. Jan-Feb 2000, pp. 54-66.

Sources used in this document:
Works Cited:

Bettiol, M. (2010). HP CEO says he didn't buy Palm for smartphones. BGR. Retrieved April 9, 2011 from http://www.bgr.com/2010/06/02/hp-ceo-says-he-didnt-buy-palm-for-smartphones/

Kossovsky, N. (2002). Fair value of intellectual property: An options-based valuation of nearly 8000 intellectual property assets. Journal of Intellectual Capital. Vol. 3 (1) 62-70.

Rivette, K. & Kline, D. (2000). Discovering new value in intellectual property. Harvard Business Review. Jan-Feb 2000, pp. 54-66.
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