Method Selection explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Eight intangibles in one acquisition, and the answer is not the same method eight times.
The mapping
| Asset | Method |
|---|---|
| A well-established trademark that differentiates products and has a loyal customer base | Relief-from-Royalty Method / Multi-Period Excess Earnings Method |
| A domain name highly relevant to the business with a strong online presence | Guidelines Transaction Method |
| Proprietary technology that improves manufacturing processes and is essential to the competitive edge | Relief-from-Royalty Method / Multi-Period Excess Earnings Method |
| Acquired customer contracts providing predictable revenue over several years | Multi-Period Excess Earnings Method |
| An agreement with a key employee restricting them from working with competitors | With-and-Without Method |
| A group of skilled workers trained for unique processes | Replacement Cost Method |
| Software purchased from a third party | Replacement Cost Method |
| Licences to operate in regulated industries | Relief-from-Royalty Method |
Four principles do all the work here.
Licensable assets go to relief from royalty. Trademarks, technology and regulated licences are all things a third party would pay to use, so a royalty rate exists or can be constructed. That is why three of the eight land there.
Only one asset can take the MEEM. Note that (a), (c) and (d) all list it — but the method values the primary intangible asset of the business, and running it on two assets against the same cash flows causes double counting of cash flow as well as issues related with 'cross charging'. The alternatives are offered so that whichever asset is primary takes MEEM and the others take a different route.
Tradeable assets go to the market approach. The domain name is the only one mapped to the guidelines transaction method, and for good reason: domains are bought and sold openly, so a guideline intangible asset genuinely exists. For every other asset here, intangible assets are often purchased "bundled" and no separate price is observable.
Replicable assets go to replacement cost. The workforce and the bought-in software both pass the three cost approach criteria — they can be recreated, nothing legally prevents it, and it can be done quickly enough that no premium attaches to immediate use.
The non-compete is the outlier, and necessarily so. It produces no revenue and cannot be licensed; its whole value is the harm it prevents, which only with and without can measure.
The one asset that cannot be recognised
Item (f) — a group of skilled workers who are trained specifically for its unique processes and operations — is mapped to a valuation method even though it cannot be identifiable as an intangible asset.
That is not a contradiction. The workforce must be valued to compute its contributory asset charge in the MEEM applied to the primary intangible, even though it will never appear as a separate line on the balance sheet.
Working the method selection through
- Identify which intangible is primary — that one takes the MEEM.
- Ask of each remaining asset whether it could be licensed; if so, relief from royalty.
- Ask whether comparable assets trade separately; if so, a market method.
- Ask whether it could be rebuilt quickly and lawfully; if so, replacement cost.
- For a restriction rather than a right, use with and without.
Common mistakes in method selection
- Applying MEEM to more than one intangible in the same allocation.
- Using a market method where no separate price was ever observed.
- Valuing a licensable asset at its build cost.
- Omitting the workforce because it is not recognisable, and understating the contributory charge.