In this article, we will explore the methodologies for valuing general classes of tangible assets as well as those methods applied to valuing intangible assets consisting of patents and copyrights. It has become increasingly clear that legal considerations can play an important role in asset valuation. Accordingly, we will also examine the impact of legal issues upon the valuation of tangible assets, patents and copyrights.
Purposes of Valuation
Understanding the nature and value of the assets of a business is essential for a variety of reasons. In the general context of operations, asset values are an important consideration in formulating asset management and protection policies. Asset valuation can also bear upon the amount of credit that may be made available to a business. In the context of a sale or other strategic transaction, asset valuation is obviously a central consideration in structuring and pricing the transaction. Other purposes for which asset valuation may be important include, among others, financial and tax reporting, capital budgeting, litigation proceedings and purchase price allocations in connection with an acquisition transaction.
Valuation of Tangible Assets
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