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How to value intangible attribute given to a partnership?

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If a partner brings an intangible attribute (such as a business expertise or an established clientele) to a partnership, how is this contribution valued and recorded?

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Solution Summary

Short discussion (195 words) is in everyday language suitable for novice to intermediate. Two options are mentioned and examples given.

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VALUATION:

How to value depends on the asset. Typically before a partnership agrees to accept an asset contribution, they agree on a value. This can be based on market pricing, an appraisal or some computation (such as the present value of rents or income expected). The higher the value, the greater share the incoming partner has and the lower the value, the lower the incoming partner ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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