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we are asked to find the value of asset using asset based valuation.
In the caluclations
Net assets 6286
Patent 10000
Inventory (1020)My understanding of the inventory adjustment is that the net assets includes the full value at 5400 . So only 70% of 5400 is realisble…so balance 30% is written off fromthe value of net assets.
But why are we adding the value of patent back to net assets?
Note (v) of the question says that the patent has not been included in the non-current assets on the SOFP (as is the case in financial accounts). It is however an asset of the business and so for the purposes of valuing the shares it needs adding to the other assets in order to get the full asset value.
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