What is an Identifiable Asset?
An identifiable asset is anything that has commercial or exchange value and can provide future economic benefits. Identifiable assets can be tangible or intangible.
How Does an Identifiable Asset Work?
Let’s assume XYZ Company intends to purchase an office building for $10 million. When the company executes a legal purchase agreement with the seller, XYZ Company asset on its balance sheet.
Assets that are not identifiable are generally considered goodwill. This would include amounts paid based on Company XYZ's future potential rather than for identifiable assets. Accordingly, one way to tell whether an asset is identifiable is if it can be disposed of without disposing of the entire business.
Assets are presented on the balance sheet in order of their liquidity. If a company expects to sell or otherwise recognize the economic value of an asset within one , the asset is generally classified as a current asset on the balance sheet. If a company expects to sell or otherwise recognize the economic value of an asset after more than one , the asset is generally classified as a long-term asset. Property, plant and equipment (such as the office building above) are common .
Most assets lose value as they age, that is, they depreciate (amortization is the used when referring to intangible assets). The rate at which a company chooses to depreciate its assets may result in a book value that differs from the current market value of the assets.
Why Does an Identifiable Asset Matter?
Information about a company’s identifiable assets is a key component of accurate financial reporting, business valuation and thorough financial analysis. Although the Financial analysts must also carefully study the to a company’s financial statements.Standards Board, the Securities and Exchange and other regulatory bodies define how and when a company’s identifiable assets are reported, companies may employ a variety of accepted methods for recording, depreciating and disposing of assets, which is why