John owns a bookstore. After three years of successful operation John decides to close the store. You have been asked to set valuation for the tangible assets. Since the property (land or building) is leased, you cannot consider it as the owner's asset.
In order to determine the appropriate valuation of the asset portion of the bookstore, you need to perform the following:
- Identify and list the business assets to be valuated.
- Determine if the inventory (books) can be considered as an asset. Why or why not?
- Determine the method you would use to price the assets. Why?
- Determine how you would set the selling price. Would you set it high, low, or similar to other like businesses in the locality? Why?
- Determine what you would do with the items that do not sell.
Now that you have a clear idea of the assets to be considered for valuation, conduct research using the Internet and the South University Online Library to determine the approximate valuation of the assets. You may contact a local auction company to get a realistic picture of the valuation process. The following table may assist you in tracking the information: