What is an Asset Approach to estimating enterprise value?

An Asset Approach to estimating enterprise value under ASC 820 is based on the current and future value of the enterprise’s assets. These approaches are based on the accounting principle that the net value of a company is the value of its assets minus the value of its liabilities. Analysts may use these approaches alongside methods from the Income Approach and the Market Approach.The two most common techniques under an Asset Approach are:

  • Asset Accumulation—use the current and future value of assets and liabilities to inform the enterprise value today
  • Replacement Cost New—take into account the cost of replacing the enterprise’s assets

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