The document discusses the relief-from-royalty (RFR) approach to valuing intangible assets, emphasizing that the fair value corresponds to the present value of cost savings from avoiding royalty payments. It outlines a five-step process for implementing the RFR method, which includes setting the valuation purpose, estimating economic benefits, determining a hypothetical royalty rate, calculating the discount rate, and performing the final calculation. The RFR method aims to provide a structured means of valuing intangible assets based on potential economic advantages.

1. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022

2. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The relief-from-royalty approach is based on the idea that
the fair value of an intangible asset equals the present
value of the cost savings realized by the owner of the
asset that result from not having to pay royalties for the
use of the intangible asset to another party

3. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The RFR steps :
Step 1 : Set the preliminary -Purpose of
valuation, standard or basis of value and
premise of value

4. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The RFR steps :
Step 2: Estimate economic benefits (revenue
projection)

5. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The RFR steps :
Step 3 : Estimate hypothetical royalty rate

6. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The RFR steps :
Step 4 : Estimate discount rate

7. KTP & Company PLT (AF1308)(LLP0002159-LCA)
Relief from Royalty
intangible assets valuation
AskKtpTax
AskThkAcc
29/03/2022
The RFR steps :
Step 5 : Calculation
The RFR method: FV = PV (r) ∑ (revenue x
{royalty (1-tax)}