Which approach to value tangible assets focuses on current selling prices from actual transactions?

The market approach to valuing tangible assets is centered around the principle of using current selling prices from actual transactions involving similar assets. This method involves analyzing comparable sales data to determine a fair market value. By looking at what similar items have sold for in the market, professionals can establish a value that reflects current demand, supply conditions, and other market factors impacting pricing.

This approach is particularly useful when there are sufficient comparable sales, as it provides a tangible benchmark that reflects real transactions. It contrasts with the income approach, which derives value based on the income an asset can generate, and the cost approach, which estimates value based on the cost to recreate or replace the asset. The asset-based approach often considers the value of the business’s individual assets and liabilities but does not focus specifically on current market prices from transactions in the same way the market approach does.