Tangible assets are all those assets of a business that have a physical form. They include fixed assets, such as machinery, buildings and land, and current assets, such as inventories, investments and cash.
To get the most out of them, they must be monitored and managed in a professional manner.
The real estate category includes industrial, commercial and municipal land, building improvements and easements. Movable property refers to machinery, equipment, inventory, motor vehicles, business fixtures, furniture, computer equipment, wiring, plumbing and similar items.
Valuations of tangible assets The use of movable and immovable property can help minimise taxes, maximise your return and gain a competitive advantage.
The valuation of tangible assets plays a key role in many business situations, including, but not limited to:
- Fiscal and financial reporting
- Asset control
- Property insurance
- Ad valorem taxes
- Replacement budgets
- Mergers and acquisitions
- Refinancing
- Reorganisation
- Departure planning
Even if they are not for sale, tangible assets represent an important part of the value of companies and can be used for:
- Providing goods or services
- Contribute to the company's cash flow
- Getting cash in case of emergency
- Fulfilling your business objectives and goals
- Loan guarantee
Valuation for insurance purposes
Valuation of assets for insurance purposes is the calculation of the value of a company's insurable assets through the application of standardised and generally accepted techniques.
Who benefits? Both SMEs and large corporations with exposure to risks of any kind that may materialise in a claim.
What are the advantages of valuation for insurance purposes?
1. The derogation of the proportional rule by the insurance company.
2. Premium savings, if underinsurance is detected.
3. Serve as a basis for negotiation in purchase and sale transactions, collateral or refinancing with credit institutions, as well as adequate asset management.
4. Have a detailed inventory of the main means of production and know the sums insured per location for each risk situation.
5. Structure the values in a manner appropriate to the particular policy conditions of the insured.
Impairment testing, when and why to carry out impairment tests
Impairment is the estimated loss in the value of an asset that represents the difficulty of recovering, through use, sale or other disposal, its full carrying amount. An asset is impaired when its carrying amount exceeds its recoverable amount..
The tests are useful because they highlight the need to change depreciation methods, useful life or residual value.
What are the signs of deterioration? They can arise from both external sources (legal changes, market economics, etc.) and internal sources (poor asset performance, obsolescence, losses).
How do you check for possible deterioration? The carrying amount of the asset shall be compared with the recoverable amount, being the higher of fair value less costs of disposal and value in use.
When should they take place? They are carried out at the close of the annual accounts or when there are indications of impairment in the value of its assets. In the case of goodwill, impairment testing is mandatory, even if there is no indication of impairment.
How can Gesvalt help? As an independent expert with 25 years of experience, Gesvalt provides greater confidence and facilitates the acceptance of accredited fair values in auditing processes. The valuation service allows for the identification of Cash Generating Units and the allocation of goodwill. It also includes the preparation of valuation reports on assets subject to impairment tests and the defence and presentation of the report to the auditor.