Asset Identification, Classification, and Inventory
Accurate valuation begins with knowing exactly what is being valued. Candidates must distinguish real property (land and improvements), personal property (tangible movable assets and intangible assets), and the bundle of rights conveyed. A valuation of a leased fee interest is not the same as a leasehold or a fee simple interest; the rights, not just the physical asset, define the assignment.
Classification matters for method selection. Tangible personal property splits into machinery and equipment, furniture and fixtures, and vehicles; intangible assets include goodwill, trademarks, contracts, and customer relationships. Fixtures are a classic trap: an item that is physically attached may still be personal property if the intent and manner of annexation indicate otherwise. Apply the tests - manner of attachment, adaptation to the realty, and intention of the parties.
Inventory requires a defensible listing: unique identifier, description, location, quantity, condition, and ownership status. Verify existence and condition; do not accept a client-prepared list without corroboration. Note leased, consigned, or customer-owned assets separately - they are not the subject's property and must be excluded from the value conclusion.
Worked example: a client lists 200 machines; 15 are leased. Inventory 200 for existence, but value only 185 owned units, and disclose the leased units as excluded. Misstating the count by including leased assets overstates value and is a frequent distractor.
Traps: valuing a going concern when the assignment calls for the assets only, and double-counting intangibles already reflected in tangible value.