Results 1 to 10 of 10

Thread: Company Assets

  1. #1
    Email problem
    Join Date
    Jul 2008
    Location
    Polokwane
    Posts
    17
    Thanks
    0
    Thanked 1 Time in 1 Post

    Company Assets

    Hi

    I was wondering.

    What counts as an asset to a company.

    How would you define the term "asset"?

    Would intellectual property count as an asset?

    Thanks!
    Hannes Gouws

  2. #2
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Hi Hannes
    Quote Originally Posted by Hannes.Gouws View Post
    Would intellectual property count as an asset?
    Sure it is. The problem is how would you value it and how (if this is your line of thinking) would you introduce it into your financials.

    There is an old adage - there is no profit without a sale. That might seem obvious, but the implications are deep.
    The trouble with opportunity is it normally comes dressed up as work.

  3. #3
    Email problem
    Join Date
    Jul 2008
    Location
    Polokwane
    Posts
    17
    Thanks
    0
    Thanked 1 Time in 1 Post
    That is just what I was thinking.

    How do I value it and how do I bring it onto my balance sheet?

    In my case when referring to intellectual property I am referring to our in-house developed software product.

  4. #4
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Quote Originally Posted by Hannes.Gouws View Post
    How do I value it and how do I bring it onto my balance sheet?
    The only way I can think of is to capitalise your development costs rather than claim these as an expense. However, I don't know if that fits in with GAAP. A serious CA will know for sure. Hopefully someone else will comment.

    I'd also expect that value would attract close scrutiny before it is relied on as a realistic value for securities purposes (comes back to the fair market value in a sale situation).

    Which raises the question - Why do you want to bring it onto your balance sheet anyway?
    The trouble with opportunity is it normally comes dressed up as work.

  5. #5
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    An after thought:
    A sworn appraisal probably means more than any number you put down on your balance sheet.
    The trouble with opportunity is it normally comes dressed up as work.

  6. #6
    Gold Member daveob's Avatar
    Join Date
    Feb 2008
    Location
    Amanzimtoti
    Posts
    655
    Thanks
    107
    Thanked 118 Times in 103 Posts
    Why not sell your software copyright to your offshore trust, then have your company buy a monthly license ( in US$ or £ ) from your trust to use the software. That way you get a few $$'s and you get an expense to write off on your local company to help reduce your local tax exposure.
    Watching the ships passing by.

  7. #7
    Email problem
    Join Date
    Jul 2008
    Location
    Polokwane
    Posts
    17
    Thanks
    0
    Thanked 1 Time in 1 Post
    Well surely all assets must be reflect on the balance sheet, even if so only for informational purposes.


    Thanks for your input.

  8. #8
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    All assets must be listed in the assets register, at least for a company. The deemed value of your developed software, if it is significant (and I agree that is entirely possible), could be reflected as a note in the financial statements.

    The balance sheet is a product of financial transactions and application of a series of rules. This is something rather different from realisable market values. Consider a vehicle that was capitalised at purchase and depreciated over four years. At the end of four years the vehicle's book value might be R1 and that is what is shown in the balance sheet. But is that really the realisable value of the vehicle?

    Ultimately, we come back to the real purpose of introducing the value into the balance sheet. If it is to just to puff up the balance sheet to make it look good, I'd question the motivation.

    If it is to address structural problems with the balance sheet I'd suggest getting some quality time with a CA to explore options - because the circumstances are bound to be very personal and talking to general principle might not cover the ground that needs to be covered.
    The trouble with opportunity is it normally comes dressed up as work.

  9. #9
    Silver Member
    Join Date
    Jun 2008
    Location
    JHB
    Posts
    271
    Thanks
    73
    Thanked 76 Times in 56 Posts
    "South African Breweries has objected to the proposed amendments in the Revenue Laws Amendment Bill 2007 relating to the taxation of intellectual property.

    The intellectual property provisions of the draft Bill aim to prevent the leakage of tax that occurs when locally developed intellectual property is taken to offshore tax havens and tax deductible royalties are paid for its use by the South African registered company.

    In terms of the draft Bill the tax deductibility of payments made for the use of intellectual property would not be allowed if the property was once owned or developed locally and deductions would also be prohibited for intellectual property being used under licence.

    Craig Mitchell, SAB group tax manager, in making submissions to the National Assembly’s portfolio finance committee on the Bill, stated that the draft proposal would give rise to ‘significant double taxation in relation to wholly legitimate and commercially robust transactions’ and would ‘act as a deterrent to the use of South African companies by multinational groups as their centre for contract intellectual property innovation, research and development’ for international use.

    He added–

    ‘It would clearly not make sense for such groups to do so in view of the unpalatable income tax consequences that [the Bill] is intended to cause. From our perspective it does not look attractive as a multinational.’

    SAB, as part of a multinational group, made extensive use under licence of intellectual property developed outside South Africa. "

    (Business Day, October 17th 2007.)

  10. #10
    Site Caretaker Dave A's Avatar
    Join Date
    May 2006
    Location
    Durban, South Africa
    Posts
    20,980
    Thanks
    3,055
    Thanked 2,463 Times in 2,068 Posts
    Blog Entries
    12
    Quote Originally Posted by Morticia View Post
    The intellectual property provisions of the draft Bill aim to prevent the leakage of tax that occurs when locally developed intellectual property is taken to offshore tax havens and tax deductible royalties are paid for its use by the South African registered company.
    Gives new meaning to the "brain drain." But personally, I don't blame SARS for seeing this as tax avoidance and responding accordingly.

    I wonder where the Amstel IP is held? It's doing very well in the USA and it would be cool to see some dollars flowing this way.
    The trouble with opportunity is it normally comes dressed up as work.

Similar Threads

  1. Any one want a 10 year old shelf company
    By Moneymaker in forum General Business Forum
    Replies: 25
    Last Post: 14-Jan-14, 02:19 PM
  2. Replies: 1
    Last Post: 06-Apr-09, 01:09 PM
  3. Is the grass Greener off-shore ?
    By daveob in forum Tax Forum
    Replies: 5
    Last Post: 22-Jun-08, 02:01 PM
  4. Replies: 1
    Last Post: 22-Feb-08, 04:38 PM

Tags for this Thread

Did you like this article? Share it with your favourite social network.

Did you like this article? Share it with your favourite social network.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •