Valuing Tangible Assets
Tangible assets refer to a company’s assets that have a physical form, which have been purchased by an organization to produce its products or goods or to provide the services that it offers. Tangible assets can be categorized as either fixed asset, such as structures, land, and machinery, or as a current asset, such as cash.
Other examples of assets are company vehicles, IT equipment, investments, payments, and on-hand stocks.
Valuing Intangible Assets
Intangible assets are assets that take no physical form, but still provide a future benefit to the company. They may include patents, logos, franchises, and trademarks.
What is Asset Valuation?
Asset valuation simply pertains to the process to determine the value of a specific property, including stocks, options, bonds, buildings, machinery, land or other properties that is conducted usually when a company or asset is to be sold, insured, or taken over or used as underlying for a financial instrument.
The assets may be categorized into tangible and intangible assets. Valuations can be done on either an asset or a liability, such as bonds issued by a company.
These two types of assets are crucial components of a company's balance sheet and overall financial health. The evaluation process for each type of asset is different, as tangible assets are physical items, while intangible assets are non-physical resources.
Tangible assets are physical items owned by a company, such as machinery, buildings, vehicles, and inventory. The evaluation of tangible assets can be done using two primary methods:
- Cost Method: This method is based on the historical cost of the asset, which is the original purchase price, plus any costs associated with acquisition, such as transportation and installation. The asset's value is then adjusted for depreciation over time, which is an allocation of the cost over the asset's useful life. Depreciation can be calculated using various methods, such as straight-line, declining balance, or units of production.
- Market Value Method: This method values the asset based on its current market price, which is the amount it could be sold for in the open market. It requires a market for the asset, and the value can be determined by comparing the asset to similar assets that have recently been sold or by obtaining a professional appraisal.
Intangible assets are non-physical resources that have value to a company, such as brand names, patents, copyrights, trademarks, and customer relationships. The evaluation of intangible assets is more complex due to their lack of physical presence and often involves specialized expertise. Some common methods for evaluating intangible assets include:
- Cost Method: This method values an intangible asset based on its historical cost, which includes any expenses incurred in the creation or acquisition of the asset. For example, costs associated with research and development or legal fees for obtaining a patent. If the intangible asset has a finite useful life, it may be amortized over that period, similar to the depreciation of tangible assets.
- Income Method: This approach values an intangible asset based on the future economic benefits it is expected to generate. The method involves estimating the future cash flows the asset will generate and then discounting those cash flows to their present value using a discount rate that reflects the time value of money and the risks associated with the asset. Examples of income methods include the discounted cash flow (DCF) method and the relief from royalty method.
- Market Approach: This method values an intangible asset based on market transactions involving comparable assets. It requires finding similar intangible assets that have been bought or sold in the market and adjusting the transaction prices for any differences between the comparable assets and the subject asset. However, finding truly comparable transactions can be difficult due to the unique nature of many intangible assets.
The evaluation of both tangible and intangible assets requires careful consideration of the specific circumstances and may involve the use of multiple valuation methods to arrive at a reliable estimate of an asset's value. Ultimately, the choice of valuation method(s) depends on factors such as the nature of the asset, the availability of market data, and the purpose of the valuation.
Valuation and Audits
A valuation gives you an indication of your negotiations to sell or credit your asset to potential buyers or banks. A valuation is the basis of a sale of your goods in addition to the analysis.
We do not accept analyzes from external institutes as a basis for an assessment.
We know that other “institutes” sign significantly higher ratings for different assets or metals. But the price of a commodity is not a request that you can buy. For us, the acceptance of documentation stands for the price that is paid for it. Please consider this in advance so that you do not end up in a one-way street during your future business ventures and have to rewrite the entire documentation later.
Important: A valuation always refers to the smallest unit of a commodity (eg grams, meters, etc.). The price can only be linearly extrapolated in a few cases. In order to determine the price of your entire lot, we are happy to create one for you Metal audit.
In order to set a price for a metal, we use a network of mine operators, producers, buyers and sellers, intermediaries and end customers that has grown organically for over 10 years.
Bank Assessment Audit
- is a report on your product, market, market environment, occurrence, manufacture, use, customers and characteristics.
- calculates the total value of your lot of a particular product. In doing so, we use the requirements of IFRS13 for the valuation of goods.
Depending on the product we need 3-5 weeks to create. The audit is delivered as a PDF.
The following documents are required to create the audit:
- Ordering PDF
- Protocol of sampling
- Warehouse receipt
- Import / export permits (optional)
- Proof of origin
- Manufacturer Datasheet
- Packing List