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Intrinsic or extrinsic trade price

Intrinsic or extrinsic trade price
Intrinsic or extrinsic trade price

Having as a reference, the fact that the attribute of the business establishment configures its fruits, which are known as intangible elements: goodwill-goodwill, that is, goodwilland that periodically arise from the thing, business establishment, whether it be physical or virtual, this fruit being highlighted because they represent the potential to generate a super profit that can exist at the present moment or possible to exist in the future, without embezzling the its primary substance of goods and rights organized for the exercise of the company.

The need arises to reflect on the two hypotheses of scientifically possible pricing of types of goodwill prices, that is, of the goodwillgoodwill or goodwill, in the modality: intrinsic or extrinsic, as follows:

Intrinsic price of goodwill – represents the price that is related to the present-current performance of the businesses linked to the business establishment, that is, the existing potential to generate super-profits.

The intrinsic price is inherent or linked to the moment of the evaluation, therefore, without pricing its estimation with future circumstances and/or with the technological development of the products/services. The intrinsic value of goodwill is usually done through the holistic method, which represents a form of fundamental analysis, because this analysis evaluates not only the quantitative economic aspects contained in the financial statements, but also the qualitative aspects, such as the management of the business. and the lifespan.

The price of goodwill-goodwill is a type that basically has two types of components: the intrinsic one, arising from the current economic performance of the business, and the extrinsic one, which can be measured by future social-economic factors, which are supposed to interact. with the business. Among them, the best known is the so-called increase and longevity of a business, caused by scrapping, technological overcoming or the improvement and scientific development of products and/or services.

The intrinsic price valuation procedure refers to the set of financial statements for the last five years prior to the valuation base date; and extrinsic, the subjective projection of the set of financial statements for the next 10 years.

Extrinsic goodwill price – represents that price that is attributed by future market expectations and its volatility (prosperity and/or decline), both backed by a study of economic feasibility of implementing a business.

The extrinsic price of goodwill is calculated outside the accounting records recorded in the books, considering facts that have not yet occurred, and based on the Probable Value of Future Results (VPLF), that is, future operating profit/loss compared to the investment price future in operational assets, concomitantly with the customary factors of the holistic method that is contemporary and integral to the General Theory of the Goodwill.

Extrinsic means that external price, just outside the moment of valuation, and which is not part of the essence of the evaluation at present or in the past, but at a future moment expected by the feasibility projection.

Compensation for the loss of a business opportunity indicates the need for an extrinsic assessment of the goodwill. Considering what would be reasonable, probable and proportional to the volume of business arising from the requested chance. As may be the case of a business company that has not yet produced profits, but already has assured prospects of them, such as the situation of the activity being in implantation or in the beginning of activity.

These two concepts referenced in this reflection represent an in verbis copy of our book: Modern Accounting Dictionary – from Rearguarda à Vanguarda. 12. ed. Curitiba: Juruá, 2022, in press.

The study of these two goodwill-goodwill price hypotheses, intrinsic and extrinsic, as a conceptual solution, within the scope of the literature and consequently in the work of the experts, is very important, as it legitimizes the work of the experts in the solution of scientific questions, indemnities based on probable future events and the implementation of a new business, such as a startup; and the determination of assets or duties based on a pricing on the date of the company’s resolution in relation to a partner or shareholder.


HOOG, Wilson AZ Modern Accounting Dictionary – From Rear to Vanguard – Contains the IFRS Concepts. Revised, Updated and Expanded. 12. ed. Curitiba: Juruá, 2022, in press.

Accounting reflections serve as a reference guide for the creation of scientific concepts, theories and values. It is the act or effect of the spirit of a philosopher-scientist to reflect on knowledge, things, acts and facts, phenomena, representations, ideas, paradigms, paradoxes, paralogisms, sophistry, fallacies, petitions for principles and analogous hypotheses.

The article is in Portuguese

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