5.3 Application of the Asset Based Approach Recall that the Asset Based Approach to valuation relies primarily on the valuation of the subject’s assets and liabilities as well as reviewing the possibility for unrecorded intangible assets. The primary methods for determining business value under the Asset Based Approach are (1) the adjusted book value method, (2) the liquidation value method, and (3) the cost to create method. However, these methods do not account for any unrecorded intangible assets that are many times the essence of the subject’s value (either as a going concern or if considered in liquidation. In the case where it is evident that the subject’s calculated indicated value (using other approaches as well) is greater than the net tangible asset value, the Asset Based Approach must be modified and amended with other acceptable methods of determining value. On the other hand, if it is evident that the entity’s calculated indicated value is less than the net tangible asset value (after appropriate adjustments, the premise of value should be as if the entity was in liquidation. Net Cash Flow to Equity/Shareholders 860,444 $ Long‐term Sustainable Growth Rate × 103.00% "Next Years" Cash Flow Available for Equity Capitalization Rate (Table 32) Operating Indicated Value on Control, "As if freely traded" basis
