Definition of Net Asset
Net Asset means any item or property owned or controlled by a company or individual whose economic future benefit belongs to the holder.
Brief Explanation of Net Asset
Net asset is thus total assets of the company less liabilities.
- Net assets are calculated on fair market value basis.
- A company for example has total assets of $ 200,000, total liabilities of $ 50,000 and goodwill of $ 60,000 then net assets of company would be calculated as follows
$ 200,000- $ 50,000- $ 60,000= $ 90,000
- It is fair market of total asset minus fair market value of total liabilities.
- Fair market value is the current prevailing value or price of an asset or liability.
- Short term assets or current assets include cash, receivables, inventory etc.
- Long term asset includes Property plant and equipment, Land and building, computers, furniture and fixtures.
- Short term liabilities or current liabilities include payables, short term loans and interests.
- Long term liabilities include long term loans and debts and any other obligations.
- Net assets does not include intangible assets.
- Net asset value shows the asset position of the company without including any intangible asset and valuing assets on their market value.