Aged assets have been held for an extended period of time and may be improperly valued or past their useful life. Their owners may decide to sell or discard them because the expense of maintenance and associated activities is no longer justifiable. Consultants offer assistance with processing aged assets, for companies that can’t handle them on their own or prefer to contract this work out. It’s also possible to work directly with a local representative or dealer of similar assets who can arrange for their sale or disposal.
One example of aged assets is investments held past the point where they might be useful. Banks, for example, can end up with an inventory of foreclosed homes. These nonperforming assets don’t bring in any revenue for the bank, and in fact cost money because it needs to keep up with property taxes, basic maintenance, and other expenses. If it continues to keep them, it may lose even more money in the long term, so may decide that the best option is to sell them.
Equipment, ranging from computers to tractors, can also be an aged asset. It may not function at all, or could be in such a poor condition that it doesn’t work well. Aging can also occur when assets are no longer useful for a given application, even if they are in good working order. A company no longer making a product that requires special equipment, for example, has no need to keep that equipment.
Sitting on aged assets can be dangerous. The longer they are held, the more money may be sunk into them without returns, which can make them increasingly expensive. In addition, the chance to sell and realize some money may be lost as the assets deteriorate or become even more obsolete. Companies may have measures in place to determine how to handle assets once they are no longer in use, with the goal of avoiding situations where they end up with a large inventory of useless items.
If equipment is in good working order, it can be sold to a company that needs it and can put it to use. Another option is remanufacturing or refurbishment of aged assets to bring them into salable condition, or to increase the sales price. Putting a new roof on a home, for instance, might make it appealing and could lead to a sale. Consultants can help a company determine the best way to get rid of nonperforming assets in its portfolio.