Asset purchase is a type of acquisition in which the purchaser only wants to purchase the assets of the seller. Although asset purchase is a common practice but it must be done with extra care so that there should be no confusion both at the seller and the purchaser end.
There must be a legal contract between purchaser and the seller regarding the purchase of assets and that contract must be extend with the business partner of the seller so that there should be no confusion and havoc created between these two parties. During the process of asset purchase an agreement is made between the purchaser and the seller. This agreement states that purchaser is only acquiring those assets and associated liabilities that are stated in agreement. The asset purchase does not include any other liability that is not stated in the agreement. The acquirer of the assets will purchase the assets on the current market value of the assets. And will depreciate the market value for payment of taxes regarding those assets. If the market value of the asset is less than the net book value of the asset the acquirer won’t have any benefits regarding the tax payment. The acquirer will not acquire any net operating loss with the asset as it is not purchasing any business entity of the seller. This must be made sure before finally acquiring the assets from the seller that the acquirer must obtain the actual titles of assets being acquired to avoid any legal complexities in future.
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