How to Value Our Assets?

Discussion in 'Growing and Managing a Business' started by Gox777, Apr 3, 2010.

  1. Gox777

    Gox777
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    Hello,

    In brief, I'm assisting in the management of a console video game arcade. We're trying to figure out how to value our assets. This includes games, TVs, couches, tables, chairs, decoratives, etc.

    Do we...

    A. Report the value of our assets based on their original retail value.
    or
    B. Report the value of our assets based on their current market value (or the current market value for similar used equivalents)

    For the past 6 years, the owners have been reported to their accountant on only the most important/expensive assets for the sake of simplicity. Now however, we're trying to become more organized - utilizing databases more. The idea is to keep better track of our statistics to make our business seem more legitimate and attractive to investors. Reporting detailed asset value is part of that.

    So is there a rule of thumb for how to go about valuing our assets? Figure out values by searching for similar products on ebay and second-hand stores? Are there any legal considerations as far as this goes?

    Thanks
     
  2. azeem1984

    azeem1984
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    Hi
    Its very and simple way to Value your asset Make listed of every thing in your setup that have value and check its market sales Prices and count all values
     
  3. Business Forms

    Business Forms
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    hello my friend... i think B. Report the value of our assets based on their current market value .... current market value is a good one ... current market value gives a right track your statistics to make your business
     
  4. Gox777

    Gox777
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    Ok that helps a bit.
    So there's not really an exact science to it? I don't need to be concerned with any depreciation formulas? I can just find some reasonable values for equivalent items and figure what the total value for everything would be if we were forced to liquidate ASAP...

    (I'm also aware that there are independent companies that do valuation, but I'm thinking we'll call upon them at a much later time when deemed necessary)
     
  5. Fergal

    Fergal
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    Welcome to Business Advice Forum Gox777 and thanks for asking your business questions. The method you use to value your assets will partly depend on what your objectives of the valuation are. If you want to get a true value of what they are worth today, the most accurate process would be to value them based on what they can be sold for, in their current condition, in the market today.

    If it's an accountancy exercise you could use a depreciating value method. For example, if you are valuing a building you could reduce it's value on your books by 5% every year (i.e. depreciate them over 20 years). When it comes to computer equipment you would depreciate them over three years (i.e. reduce their value on the books by 33.33% of their purchase value, every year). Other fixtures and fittings would often be depreciated over 5 or 7 years.

    Please do post back if you have any further questions.
     
  6. gtt

    gtt
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    Determining your return of investment (ROI) and setting a very reasonable price would be best but I think it's still important for both business partners to clearly understand the value of the benefits they are providing and receiving. Enlisting the potential benefits for both parties (i.e. reputation, market positioning, networking, staff/organizational development and positioning, financial benefits, etc.). Conducting a solid research as the foundation for building reliable valuation methods for benefits gained through partnerships although finding out how much other partnerships are worth can be difficult. Try to look on a benchmark against similar partnerships though sometimes you just can find out through colleagues in the related industry.
     
    #6 gtt, Apr 5, 2010
    Last edited: Apr 5, 2010
  7. seanstevens

    seanstevens
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    Where are you from? different countries have different accountancy rules and valuation of assets (if you get it badly wrong) can get the company in trouble with the local government bodies. In some countries the rules have been tightened up on this in the past few years as giving bad values to your assets is seen as a false way of showing the business in a better financial state than it really is.
     
  8. kereta06

    kereta06
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    That rights . Different country with different method that they used. I agree with that.
     

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