Guidelines cost approach for asset valuation

06 Jun 2020

-Cost Approach  can only be applied as the only approach in the assessment, in terms of fulfilling the provisions as follows:

a. Assessment of the object can not be assessed with the Market Data Approach and the Income Approach;

b. Object property assessment special-purpose properties;

c. Assessment of the object are the property of the new completed or not more than one year from the date Rating; • object assessment form that planned construction, renovation or addition;

d. Assessment of the item never traded in the market; and

e. Property assessment that requires details of each type of item assessment.

-Valuer are obliged to give explanations about the reasons for the use of cost approach.

-Calculating the cost to determine the value of property in the cost approach can be done through two techniques, namely:  • Reproduction costs, taking into account the cost of the price now, which is required to make a duplicate or a replica of the object by using an evaluation of materials, construction standards, design, layout (lay out), and the quality of the same object with the assessment and • Replacement cost, by considering the cost in the price now, which is required to make the replacement of the object by using an evaluation of materials, construction standards, design, layout (lay out), and quality that have been adjusted to the conditions during the assessment process.

-The use of techniques to determine the cost calculation of the value of property in the cost approach, mandatory use consistently during the assessment.

Source: marketValuer

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