Basis of assessment values. Insurance value, exchange value and liquidation value.
Insurance value is based the cost of replacing and / or reproduction cost of physical goods that are subject to loss due to events. The amount of insurance is that part of the value of a property that is recognized by the applicable provisions of an insurance policy. This value is sometimes subject to legal regulations.
Exchange value (intrinsic) is the value of a property to an investor in general. It differs from the amount of investment relating to an individual investor.
Liquidation value is given the most likely price a property can be obtained for the following conditions:
• the sale will be severely limited during a period specified by the customer or a preferred creditor;
• actual market conditions are current;
• buyer acting prudently and knowledgeable;
• Vendor is extremely obliged to sell;
• motivated buyer is normal;
• the purchaser is deemed to be acting in his best interests;
• payment is cash;
• the price is not influenced by special financial arrangements or facilities, or someone interested in selling.
Basis of assessment
We know the following valuation bases
A) Historical cost
2) The current cost or replacement
3) The value of achievement
4) Present value
A) Historical cost is a real value of assets and creating debt entry.
2) The current cost or replacement cost that is now to get it accepted at the current market, defined as a good object to that request. In the case of assets, current cost is the amount of cash or cash equivalents that would be paid if the same asset or a similar one should be purchased or manufactured today. Related liabilities are valued at nominal amounts would be paid to settle the present obligation.
3) the realizable value (current exit value) is the value now would receive today if they normally sell the asset, or would pay the debt. For assets realizable value is equal to the equivalent value in cash or numeral that can currently be obtained through their normal sales.
If debt is a realizable value of the undiscounted amount of cash (or cash equivalent) to be paid to pay obligations under the normal course of business. It can be equal to gross output, net value, ie sale value less costs to sell, the amount of transfer (assignment) done under normal or a liquidation value.
To continue using the property that is a fixed amount based on market prices corrected the condition (wear rate) and good location.
4) The present value or amount capitalized at the present time is an estimate of value based on future flows of benefits arising in the normal course of business, or updating a value that becomes available later. In short, it is a current value which is determined by the future.