1.Incremental cash flow method for intangible assets is related to concept of owner of the intangible asset does not have to rent one and he is relieved from paying any kind of royalty so the arm length royalty on licence agreement for comparing assets will be analysed and it will be reflected through International financial reporting standard which are providing incremental cash flow method in order to record them on the books of accounts so all the incremental cash flow methods which are related to recording of the intangible asset are based upon the philosophy that arm length royalty or licence agreement for comparable assets will be analysed in order to find out the overall value which will be added by this intangible asset to the total company, so it will be helpful in order to determine the additional royalties or or other cash flows which are created by these intangible asset to total cash flows of company.

It is comparison of the present value of prospective cash flow for the business with or without the tangible asset and it will try to develop itself through ability to complete and without non competing scenarios.