Business values concerns

USE OF BOOK VALUE FOR OLD EQUIPMENT IN REPLACEMENT STUDIES. This error is caused by refusal to admit that the depreciation accounting methods used in the past were wrong. Persons who make this error attempt to justify their actions by claiming that continued operation of the present equipment would eventually permit complete depreciation. This viewpoint is completely unrealistic because it gives no consideration to the competitive situation existing in modem business. The concern which can operate with good profit and still offer a given product or service at the lowest price can remain in business and force competitors either to reduce their profits or to cease operation. 

Concept 3. Going concern means that the accounting is based on the premise that the business will continue indefinitely. It is most unlikely that the values of the assets shown in the balance sheet are what the assets would realize if sold. No attempt is made in normal accounting to measure the value of the business to a potential buyer. 

There are companies focused to the biocatalytic area for which the commercialization of enzymes constitutes the main business. Some of them also include R D activities in the whole range of areas concerning adding value to their product chain. The following sections describe some of those companies, for which their enzyme or protein business results relevant for the scope of the present book. 

In the broadest sense, an asset may be defined as anything of value, such as cash, land, equipment, raw materials, finished products, or any type of property. At any given instant, a business concern has a certain monetary value because of its assets. At the same instant, many different persons may have a just claim, or equity, to ownership of the concern s assets. Certainly, any creditors would have a just claim to partial ownership, and the owners of the business would have some claim to ownership. Under these conditions, a fundamental relationship in accounting can be written as... 

Money, or any other negotiable type of capital, has a time value. When a business concern invests money, it expects to receive a return during the time the money is tied up in the investment. The amount of return demanded usually is related to the degree of risk that the entire investment might be lost. 

In multibusiness companies, the invariably skeptical business units and the company s concerned shareholders often suspect corporate headquarters of being a worthless overhead, adding no value. The corporate center finds itself having to justify its very existence. To ensure its usefulness and acceptance, the corporate center should put value at the absolute heart of its design how, in a word, can the center add incremental value above and beyond that which the businesses can create on their own. ... 

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