Question

What is the difference between tangible and intangible assets?

What is difference between fair value and market value?

What is Goodwill? Why is it difficult to determine its true value?

Answer 1

The major difference between tangible and intangible assets is that tangible assets have a physical existence and they cant be felt eg - land whereas intangibles dont have a physical appearance and they cant be felt eg - goodwill

Fair value is the the unbiased estimated value of asset considering its true potential value and the value of its true net present value whereas market value is determined by the market forces of demand and supply and its the price which the buyers are willing to pay for a particular asset.

Goodwill is the extra price which is paid for above the value of tangible assets and is a measure of attributes like people, patents, reputation etc . It is difficult to measure because estimating the present value of these things is difficult.

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