A valuation for fixed asset liquidation is usually done to determine the actual value and disposition of these assets. The following are the general steps involved in fixed asset liquidation valuation:
Asset Inventory and Classification: firstly, a comprehensive inventory and classification of fixed assets is carried out, which includes information on the type, specification, quantity and condition of the assets. This will help to systematize the management and valuation of assets.
Asset appraisal and valuation: each fixed asset is appraised and valued to determine its current real value. This can be done by one of the following methods:
Cost Approach: assessing the value of an asset based on its reconstruction cost or replacement cost.
Market Comparison Approach: assessing the value of an asset with reference to the prices at which similar assets are traded in the market.
Income Approach: assesses the value of an asset based on the economic benefits it is expected to generate.
Asset Classification and Disposal Decision: Based on the appraisal results, assets are classified into the following categories:
Disposable Assets: Assets that have a certain value and can be sold, auctioned or donated.
Scrap assets: assets that cannot be disposed of and need to be scrapped.
Assets for further review: assets that require further evaluation or decision-making.
Disposal methods and procedures: Based on the classification of assets, determine the appropriate disposal methods and procedures, such as auction, sale, donation, or scrapping. Ensure compliance with relevant regulations and policies during the disposal process.
Disposal records and tracking: Establish a clear disposal records and tracking system to record the process and results of each asset disposal. This helps to track the movement of assets and confirms the completion of the disposal.
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