The Value of business (Net Asssets) = assets- Liability: free course.

If you are taking a business owned by sole trader or partnership, it would be wiser to help them pay the money the business owes to nay creditors; so that the value of liability is zero.

There legal consideration to this, as any money owing ( liabilities) is as a result of contract between the original sole trader or partner with the outside business (creditors).  The company is a legal entity, it is separated from the owner. The contract a made between company, supplier or bank, regardless of who the owner of the company.

The owner sell existing business above the value of the net asset. The regular customer & good business reputation adds value to the business. These type of business cost high because of its values. The good will is the difference between the assets & the price the business is being sold for. The accountant classified this type of asset as intangible asset-  The intangible means it cannot be touched. The motor vehicle, equipment and stockare tangible assets, because they a physical things and can be touched.

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