Identifiable Asset

AAA

DEFINITION of 'Identifiable Asset'

An asset of an acquired company that can be assigned a fair value and can be reasonably expected to provide a benefit for the purchasing company in the future. Identifiable assets can be both tangible and intangible assets.

INVESTOPEDIA EXPLAINS 'Identifiable Asset'

If an asset is deemed to be identifiable, the purchasing company records it as part of its assets on its balance sheet. If an asset is not deemed to be an identifiable asset, then its value is considered part of the goodwill amount arising from the acquisition transaction.

For example, suppose ABC conglomerate company purchases both a smaller manufacturing firm and a smaller start-up internet marketing company. The manufacturing company would likely have most of its value tied up in property, equipment, inventory and other physical assets, so virtually all of its assets would be identifiable. The internet marketing company, on the other hand, would likely have very few identifiable assets, and its value as a company would be based on its future earnings potential. As such, the purchase of the marketing company would generate a lot more goodwill on ABC's books, because it would gain few identifiable assets from the marketing company.

RELATED TERMS
  1. Goodwill

    An account that can be found in the assets portion of a company's ...
  2. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  3. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
  4. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  5. Patent

    A government license that gives the holder exclusive rights to ...
  6. Proprietary Technology

    A process, tool, system or similar item that is the property ...
Related Articles
  1. Bonds & Fixed Income

    Cashing In On Corporate Restructuring

  2. Investing Basics

    The Merger - What To Do When Companies ...

  3. Personal Finance

    Can You Count On Goodwill?

  4. Options & Futures

    The Basics Of Mergers And Acquisitions

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center