Identifiable Asset: Definition, Uses, and Examples
Key takeaways
- An identifiable asset is one whose fair or commercial value can be measured at a specific point in time and is expected to provide future economic benefits.
- Identifiable assets can be tangible (e.g., machinery, buildings, inventory) or intangible (e.g., patents, trademarks) as long as they can be separated from the business and reliably valued.
- Assets that cannot be separately valued are generally included in goodwill when a business is acquired.
- Identifiable assets are central to valuing companies in mergers and acquisitions.
What is an identifiable asset?
An identifiable asset is any resource owned by a business that can be separated from the enterprise and assigned a measurable fair value at a given date. Examples include:
Cash and short-term investments
Property, plant, and equipment
Inventory
Patents, trademarks, and other separable intangibles
If an asset’s value cannot be reliably measured or separated from the business’s overall value, its worth typically contributes to goodwill in an acquisition.
Tangible vs. intangible—and the difference from goodwill
- Tangible identifiable assets: physical items such as machinery, vehicles, buildings, and inventory.
- Intangible identifiable assets: separable intellectual property or contractual rights that can be valued independently.
- Goodwill: the residual value in an acquisition when the purchase price exceeds the fair value of identifiable net assets (assets minus liabilities). Goodwill captures the value of non-separable factors like brand reputation, assembled workforce, or future earnings potential.
How identifiable assets are used in M&A
When one company acquires another, the acquirer allocates the purchase price to:
1. Fair value of identifiable assets
2. Fair value of liabilities assumed
3. Any remaining excess is recorded as goodwill
This allocation affects balance sheets, depreciation/amortization schedules, and future impairment testing.
Examples
Simple numerical example
Suppose Company ABC has:
Fair value of identifiable assets: $22 million
Liabilities: $10 million
Net identifiable assets = $22M − $10M = $12M
If Company XYZ pays $15 million to acquire ABC:
* Purchase price ($15M) − Net identifiable assets ($12M) = $3M goodwill
Real-world example: T‑Mobile and Sprint
Per the merger filing:
Fair value of identifiable assets: $78.34 billion
Fair value of liabilities: $45.56 billion
Net identifiable assets = $78.34B − $45.56B = $32.78B
Deal value: $35.85 billion
Goodwill = $35.85B − $32.78B = $3.07B
Summary
Identifiable assets are separable resources with measurable fair values and are essential for accurately allocating acquisition prices. Items that cannot be separately valued contribute to goodwill, which represents the premium paid for the business beyond its identifiable net assets.