What is Net Asset ?

Definition of Net Asset

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.

 

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