Scribd Logo
Upload

Welcome to Scribd!

  • 53 views

    Valuation of Assets: Vikas Vadakara

    Uploaded by

    thella deva prasad
    This document discusses various aspects of asset valuation, depreciation, and intangible assets such as goodwill. It defines tangible assets like fixed assets which are subject to depreciation over time through various methods such as straight-line and declining balance. Current assets including inventory are also discussed. Intangible assets such as goodwill represent value from brand name, customer relations, and technology. Goodwill is valued using methods like average profits, super profits, and capitalization that consider factors like profits, capital employed, and normal rates of return.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Valuation of Assets: Vikas Vadakara

    Uploaded by

    thella deva prasad
    53 views27 pages
    This document discusses various aspects of asset valuation, depreciation, and intangible assets such as goodwill. It defines tangible assets like fixed assets which are subject to depreciation over time through various methods such as straight-line and declining balance. Current assets including inventory are also discussed. Intangible assets such as goodwill represent value from brand name, customer relations, and technology. Goodwill is valued using methods like average profits, super profits, and capitalization that consider factors like profits, capital employed, and normal rates of return.

    Original Description:

    depreciation

    Original Title

    Depreciation

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses various aspects of asset valuation, depreciation, and intangible assets such as goodwill. It defines tangible assets like fixed assets which are subject to depreciation over time through various methods such as straight-line and declining balance. Current assets including inventory are also discussed. Intangible assets such as goodwill represent value from brand name, customer relations, and technology. Goodwill is valued using methods like average profits, super profits, and capitalization that consider factors like profits, capital employed, and normal rates of return.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    53 views27 pages

    Valuation of Assets: Vikas Vadakara

    Uploaded by

    thella deva prasad
    This document discusses various aspects of asset valuation, depreciation, and intangible assets such as goodwill. It defines tangible assets like fixed assets which are subject to depreciation over time through various methods such as straight-line and declining balance. Current assets including inventory are also discussed. Intangible assets such as goodwill represent value from brand name, customer relations, and technology. Goodwill is valued using methods like average profits, super profits, and capitalization that consider factors like profits, capital employed, and normal rates of return.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 27

    Valuation of assets

    vikas vadakara
    Intangible assets

    vikas vadakara
    Tangible assets

    vikas vadakara
    Fixed assets =DEPRECIATION

    vikas vadakara
    CONCEPT

    A permanent fall in the value of fixed


    assets arising through wear and tear from
    the use of those assets in business.

    vikas vadakara
    Depletion

    Amortization

    Obsolescence

    vikas vadakara
    objectives
    To calculate proper profits.
    To show the asset at its reasonable value
    To provide for replacement of an asset.
    Depreciation is permitted to be deducted
    from profits for tax purposes.

    vikas vadakara
    Causes of
    Depreciation
    Internal causes:
    wear and tear, natural resources usage,
    inefficiency , maintenance, change in
    production, restriction of production,
    reduced demand, technical progress
    External causes:
    obsolescence and effluxion of time

    vikas vadakara
    Factors in measurement of
    depreciation

    Totalcost of asset
    Estimated useful service life
    The estimated scrape value.

    vikas vadakara
    Methods of recording depreciation

    Straight line method or fixed installment


    Declining charge method or diminishing or
    WDV
    Sum of years digit method
    revaluation method
    Annuity method
    Depreciation fund method
    Machine hour method/ Production unit
    method

    vikas vadakara
    Straight line method or fixed installment

    Under this method, the same amount of


    depreciation is charged every year
    throughout the life of the asset.
    The formula = Total cost of acquisition - residual value
    or
    scrap value

    Estimated life use full life of assets

    r =R/C * 100;
    r = depreciation rate
    R = Amount of depreciation, C = Acquisition cost

    vikas vadakara
    Declining charge method or
    diminishing value method
    Under this method depreciation is charged
    at fixed rate on the reducing balance every
    year.

    Formula r = 1-n √ S/C


    S= Residual value
    C = Cost of the asset

    vikas vadakara
    vikas vadakara
    Current assests = inventory

     The raw materials,


     work-in-process goods
     completely finished goods

    vikas vadakara
    vikas vadakara
    INVENTORY SYSTEM

    1. Periodical inventory system


    2. Perpetual inventory systems

    vikas vadakara
    INVERTORY VALUATION METHODS:

    First-In-First Out (FIFO)


    Last-In-First Out (LIFO)
    Average Cost Method (AVCO)
    Weighted average method(WAM)

    vikas vadakara
    FIFO& LIFO

    vikas vadakara
    vikas vadakara
    Intangible asstes= good will

    value of a company’s
    +brand name +
    good customer
    relations+ good
    employee relations +
    proprietary
    technology =______

    vikas vadakara
    Nature of good will
    Zoologically classified by JUSTICE RICH

    Dog’s nature goodwill

    Cat’s nature good will

    vikas vadakara
    Rat’s nature good will

    Rabbit’s nature goodwill

    vikas vadakara
    Factors affecting
    Location

    Nature of business

    Time

    Efficiency of management

    Market condition

    vikas vadakara
    Methods
    1. Average Profits Method
    2. Super Profits Method
    3. Capitalization Method
    Capitalization of Average Profits Method
    Capitalization of Super Profits

    vikas vadakara
    Average Profits
    Method

    Goodwill = Average Profit * No. of Years Purchased

    Average Profit = Total Profits/ No. of Years

    vikas vadakara
    Super Profits
    Method
    Goodwill = Super Profit * No. of Years Purchased
    Where,

    Super Profit = Actual Average Profit – Normal Profit

    Normal Profit = Capital Employed * Normal Rate of Return

    vikas vadakara
    Capitalization
    Method
    1. Capitalization of Average Profits Method

    Goodwill = Capitalized Value of Average Profits - Capital Employed


     Where
    Capitalized Value of Average Profits = Average Profits X
    (100 / Normal Rate of Return)
    Capital Employed = Assets – Liabilities

    2. Capitalization of Super Profits

    Goodwill = Super Profits X (100/ Normal Rate of Return)

    vikas vadakara

    You might also like