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How Much is that Asset in the Window?

Thumbnail for 887273 Asset

|| At the Ice Museum, ALL of the assets are frozen!

This article is another experiment. Please bear with me.

Q: What is an asset worth?

A: An asset is worth whatever the highest bidder will pay for it at the time you offer it for sale.

Q: Come on, the value of an asset must be more enduring than that. You look at the balance sheets of corporations, and they don't list their assets at sales prices.

A: That's for a different purpose. We can't get the prices of all assets to trade frequently. The economic world isn't only about trading, it is about building objects, offering services… and really, it is about making people happier through service. Because the assets don't trade regularly, they are entered onto the balance sheet at:

  • Cost, which is sometimes adjusted for cost and other things that are time-related, and subject to writedowns.
  • The value of the asset at its most recent sale date before the date of the statement
  • An estimated value calculated from sales of assets like it, meant to reflect the likely markets at the time of the statement — what might the price be in a deal between and un-coerced buyer and seller?

Anyway, values in financial...


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