AD ALTA
JOURNAL OF INTERDISCIPLINARY RESEARCH
VALUATION OF INTANGIBLE ASSETS DEPOSIT INTO CAPITAL COMPANY IN CASE OF
SPECIFIC TRANSACTION
a
VOJTĚCH STEHEL,
b
ZUZANA ROWLAND,
c
JAN
MARE
ČEK
Institute of Technology and Business in České Budějovice,
School of Expertness and Valuation, Okružní 517/10, 37001
České Budějovice, Czech Republic
email:
a
stehel@mail.vstecb.cz,
b
rowland@mail.vstecb.cz,
c
marec
ek@mail.vstecb.cz
Abstract: In the case of the deposit of assets into a successor in the form of a limited
company, it is possible to use the assets of the Association which has preceded the
new formation. The need for the valuation of the Association´s assets is necessary
under such circumstances. The contribution focuses on the method of valuating
intangible assets of the Association of two natural persons. The method of the
difference of Association’s assets value and yield value was used. The specific items
forming the company’s asset are valued by various procedures based on their
characteristics. It has been proved that it is possible to set quickly and accurately the
book value of intangible assets in case it has not been previously included in the
Association’s accounts. The value of intangible assets is set on the basis of the
difference of asset and yield values.
Keywords: valuation of assets, intangible assets, association, yield method, equity
method
1 Introduction
Provided an Association of two or more persons which is not a
legal subject intends to change their status into a capital
company, it has to be established first. The Association’s asset
subsequently becomes the company’s asset by depositing it into
the newly established company. In our case the asset of the
modelled Association of two natural persons is transferred into
the newly established limited company (Ltd.). Accountancy Act
No. 563/1991 Coll. requires setting the value of the deposit. The
asset can be valued using acquisition method, at own production
expenses, reproductive price, etc. It is necessary to set the value
of the Association’s asset for this purpose in order to gain an
accurate monetary calculation of the deposit. The valuation of
company’s asset is made by several methods. Since the asset is
classified according to its type we specifically deal with the
setting of the value of intangible assets. An Association is
defined in the Civil Code, Act No. 89/2012, §27160-§2717
(Czech Republic, 2012a). The rights and obligations of
Association’s members and the members of a limited company
are defined in Trade Company and Syndicate Act No. 90/2012
Coll., i.e. Trade Corporation Act (Czech Republic, 2012b).
The valuation of Association’s asset is addressed by both the
Accountancy Act No. 563/1997 Col. & the Asset Valuation Act
No. 151/1997 Col., which deals with the valuation of asset and
the adjustment of certain acts of law.
2 Literary research
An association is formed by the contractual obligation of two or
more natural persons. The number of Association’s members is
not enclosed or limited; other natural persons can enter the
Association in the course of its existence as well as they can quit
the Association. The formation of Association does not require a
written contract. The oral agreement of the Association’s
members bears the same gravity. In case of the association of the
asset the list of the items must be made (Bezouška, Piechiczová,
2013).
The association is not eligible to legal subjectivity and therefore
it is not eligible to the rights and obligations, moreover, it cannot
possess, sell or donate anything. The asset acquired in the course
of the activities of Association’s members becomes a shared
asset of the members. There is no obligation for Association’s
registration (Nývltová
, Marinič, 2010).
If two or more natural persons take on contractual obligations in
the Association, if they associate and make a mutual effort to
achieve a common purpose by their activities or their investment
of asset, they are obliged to meet the commitment. The share of
asset of Association’s individual members should be included in
the contractual obligation. If it is not addressed in such a
manner, the shares of all the Association’s members are equal
(Horáková, 2014).
Act No. 89/2012 Col. §2727 prohibits every Association’s
member from acting in a competitive manner in relation to their
common purpose. If such action is committed, the Association’s
members may require its termination (Czech Republic, 2012a).
If an Association’s member begins to do book-keeping, all the
other members must do so as well (Nývltová, Marinič, 2010). If
an Association’s membership is terminated, the issue of a
member’s asset rights must be settled (Doležal et al., 2018).
The Association’s members provide the third parties with the
guarantee jointly and severally. In contrast, all the members of a
general partnership (G.p.) provide a guarantee in an unlimited
manner with the whole commercial and personal asset. In the
case of capital companies, such as a limited company (Ltd.),
such type of legal person is liable to provide unlimited
guarantee. However, the individual members of a limited
company provide a guarantee with up to the limit of the amount
of the difference between the paid deposit obligation and the
amount recorded in the Commercial Register at the moment of a
call for the fulfilment to the creditor. In a public limited
company (PLC) the shareholders are not obliged to provide a
guarantee with any liabilities; they are only liable to payment
obligation (Hobza et al., 2015).
The valuation of asset is defined in the Asset Valuation Act No.
151/1997 Col., which deals with the valuation of asset and the
adjustment of certain acts of law. Act No. 151/1997 Coll. §2
Article 1 states that the asset and the service are valued in the
usual manner provided the law does not provide an alternative
way of valuation (Czech Republic, 1997). The usual price is a
price which is usual on the sale of identical or similar asset or in
case of the provision of an identical or similar service in
commerce in the country on the day of valuation. It includes the
consideration of all the circumstances which influence the price
without being affected by the influences of extraordinary
circumstances in the market, personal situation of the seller or
the purchaser, or the influence of particular delight.
Svačina (2010) claims an intellectual asset belongs to intangible
assets. It includes copyrights, related works, software and
databases. In case of the valuation of intangible assets, it is
possible to use several ways of valuation. For instance, the first
way is a valuation on the basis of purchase price, i.e. the value of
intangible asset is equal to the value of purchase price (Falson,
2019). Next, the other way of valuation is a valuation on the
basis of replacement cost, i.e. the price of asset at the moment of
its purchase and record in the books. Last but not least it is a
valuation based on own costs, i.e. the self-made intangible assets
the costs of which are the costs of their production (Sandner,
2010).
The majority of the company’s intangible assets generate
premium revenues. The intangible assets are sources which
provide competitive advantages (Reimsbach, 2013).
Chung et al (2014) demonstrates and describes eight models of
the valuation of intangible assets. They are income-based model,
cost-based model, market-based model, excess operating profits
model, premium pricing model, cost savings model, royalty
savings model and option model.
Pastor et al. (2017) deals with the list of the most frequently used
methods of the valuation of intangible assets. However, he adds
that the international bookkeeping standards only deal with an
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