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2021 | OriginalPaper | Chapter

MEEM

Author : Andreas Becker

Published in: Intangibles in the World of Transfer Pricing

Publisher: Springer International Publishing

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Abstract

The multi-period excess earnings method (MEEM) is one of the income-oriented approaches for determining the fair value of intangible assets. In contrast to other income approaches, MEEM is designed to be applied only to the most relevant intangible asset with respect to cash flow generation. MEEM addresses the fact that in general assets generate cash flow only in conjunction with other assets. The method operates under the assumption that an entity has only this particular asset, while all others—referred to as contributory assets—are leased from external sources for which fictitious expenses are charged. Often such leading intangible assets are customer-related assets, in-process research, and development (IPR&D), or already developed technologies and trademarks. This chapter gives a brief overview of the practical implications of MEEM and guides the reader through the method’s parameter specifications.

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previous chapter Relief from Royalty
next chapter Incremental Cash Flow Method
Footnotes
1
IFRS 3, item 13.
 
2
IDW S 5, item 40.
 
3
See Sect. 2.2 for remaining useful life considerations.
 
4
IDW, S 5, item 90.
 
5
IDW, S 5, item 118.
 
6
See AICPA (2011), pp. 142ff for further details on the decision-tree approach.
 
7
IDW, S 5, item 116.
 
8
See AICPA (2013) for a guide to dual MEEM approaches.
 
9
For technical reasons, since order backlog usually depletes in less than a year, such a model is based on a single period.
 
10
The Appraisal Foundation (2010), p. 19.
 
11
IDW, S 5, items 98–101.
 
12
IDW, S 5, item 72.
 
13
IDW, S 5, items 133–135.
 
14
For further methods of deriving useful life, please refer to The Appraisal Foundation (2016), pp. 83ff.
 
15
Dörschell et al. (2010), p. 982.
 
16
IDW S 5, items 99, 135.
 
17
IDW S 5, item 71.
 
18
IFRS 3.
 
19
Dörschell et al. (2010), p. 981.
 
20
Dörschell et al. (2010), p. 984.
 
21
Dörschell et al. (2010), p. 981.
 
22
IDW, S 5, item 136.
 
23
Reimsbach (2011), p. 234.
 
24
AICPA (2011), p. 125.
 
25
Rzepka and Scholze (2010), p. 306.
 
26
The Appraisal Foundation (2016), p. 39.
 
27
The Appraisal Foundation (2016), p 29.
 
Literature
AICPA. (ed.). (2011). Assets Acquired to Be Used in Research and Development Activities. New York, NY.
AICPA. (ed.). (2013). Dual Multi-Period Excess Earnings in the Valuation of Intangibles. Durham, NC.
Dörschell, A., Ihlau, S., & Lackum, P. W. v. (2010). Die Wertermittlung für kundenorientierte Vermögenswerte—Bewertungsgrundsätze und Vorgehen am Beispiel der Residualwertmethode. Die Wirtschaftsprüfung, 19, 978–988.
Reimsbach, D. (2011). Der Kapitalisierungszins bei der Fair Value-Ermittlung von immateriellen Vermögenswerten. KOR, 5, 230–235.
Rzekpka, M., & Scholze, A. (2010). Die Bewertung kundenorientierter immaterieller Vermögenswerte im Rahmen von IFRS 3. KOR, 6, 297–306.
The Appraisal Foundation. (2010). The Identification of Contributory Assets. Best Practices for Valuations in Financial Reporting—Contributory Assets. Washington, DC.
The Appraisal Foundation. (2016). The Valuation of Customer-Related Assets. Washington, DC.
Metadata
Title
MEEM
Author
Andreas Becker
Copyright Year
2021
Publisher
Springer International Publishing
Book
Intangibles in the World of Transfer Pricing

Print ISBN: 978-3-319-73331-9

Electronic ISBN: 978-3-319-73332-6

Copyright Year: 2021

DOI
https://doi.org/10.1007/978-3-319-73332-6_17

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