What Is an Asset Approach?

The American Society of Appraisers defines the asset-based approach as a common method of assessing the value of a business portfolio, business owner s equity, or business stock based on the value of a business s assets after deducting liabilities, using one or more valuation methods Method. "The asset-based approach also applies the principle of substitution, which means that a cautious buyer will not buy an item for more than the price of an alternative item with the same utility. The American Association of Appraisers believes that from the perspective of the method of asset-based method, the "asset-based method in enterprise value evaluation can be analogized to the cost method in other value evaluation subjects." "Guidelines on Enterprise Value Evaluation (Trial)" This is the meaning to be expressed in Article 34.

Asset-based approach

The American Society of Appraisers defines the asset-based approach as "the use of one method or multiple methods of assessment to determine the operating portfolio and the enterprise based on the value of the enterprise's assets after deducting liabilities.

According to the requirements of the Guidelines on Enterprise Value Evaluation (Trial), asset evaluation institutions need to use two or more methods to evaluate the value of the enterprise. due to

When the assessment agency encounters a business that:

Investment income is the main source of profit for the company;

The fixed assets of the enterprise include real estate located in the bustling commercial district.

The assessment agency needs to make a long-term investment in the first

When assessing the value of an enterprise, the scope of evaluation is all assets of the enterprise, including current assets, long-term investments, fixed assets, intangible assets, other assets, current liabilities, and long-term liabilities. When different methods are used to evaluate different assets of an enterprise, it can only be explained that multiple evaluation methods have been used for the scope of evaluation involved, but it cannot be understood as the use of two or two of the evaluation object, that is, part or all of the value of the enterprise More than one assessment method. It is wrong for some evaluation agencies to confuse the two, which violates the original intention of the Guiding Opinions on Enterprise Value Evaluation (Trial).