AICPA revised IPR&D Aid will expand valuation techniques for acquired R&D

The newly revised IPR&D Practice Aid from the AICPA will significantly expand consideration of various valuation techniques, Tony Aaron (Ernst & Young), co-chair of the AICPA task force that’s revising the AID, told ASA attendees this week. For example, compared to the 2001 first edition, in which the valuation chapter contained only 70 paragraphs, the revised chapter will have over 200.

The original Aid also focused primarily on the multi-period excess earnings method (MPEEM), said David Dufendach (Grant Thornton). The relief-from-royalty method was conspicuously absent. This method recognizes that the owner of a technology is excused from having to license it, and reflects the value of the technology as the royalty savings attributable to ownership. The updated version will contain examples of MPEEM, the relief-from-royalty method, and decision tree analysis, thereby removing any perceived barriers to their use and according them appropriate weight.

The ASA presenters indicated that the AICPA hopes to expose a working draft of the IPR&D Aid for public comment sometime this fall, with a final version to be released by the middle of next year.