Asset Valuation and Depreciation

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• Asset Valuation and Depreciation

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Reasons for Valuation

• Financial reporting
• Bankruptcy
• Transaction dealing
• Litigation

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Business Assets

• Depreciation
• Land
• Debts
• Stock
• Buildings
• Goodwill
• Licenses
• Brands

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Assets
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How Businesses Appreciate Assets

• Lease
• Overdraft
• Contract purchase
• Cash
• Bank loan
• Hire

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Straight Line Method It assumes depreciation is
constant throughout the life of the asset.
Formula historic cost residual value
---------------------------------------------
estimated
useful life of asset
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How Fixed Assets Depreciate

• Age
• With use
• Unskilled workers
• Technology
• Becomes obsolete
• Disaster e.g. fire