Determining the monetary worth or value of an asset that is not new (especially for purposes of acquisition by prospective purchaser or disposal by the vendor) may not easily lend itself to comparison because of variations in handling and extent of usage.
Gunnar Lucko has several papers on residual values of heavy construction equipment. You might read: A statistical analysis and model of the residual value of different types of heavy construction equipment, 2003. He wrote, "It is therefore advised to use the regression models only to make predictions for machines of excellent, very good, good, and fair condition." Naturally, condition is correlated with usage hours and maintenance and these additional variables may measure the same thing.
For most equipment there are defined life from which residual life & corresponding value can be assessed. Sometimes for critical machinery, replacement value can also be assessed. Otherwise there are Technical Assessors also available who undertake this.
Appreciate your responses all. The end purpose is to establish the imperative for understanding the nature of some assets before their monetary value can be properly assessed i. e., that professional valuation of assets is not a desktop exercise of multiplying predetermined average variables like spent life, estimated remaining life, cost new etc. The peculiar condition of the asset itself, I believe, is vital just as one will consider the specific condition of a used car to be purchased rather than arithmetic calculation of average value.
Agree with the above explanations in their respective context; from my perspective, view the most recent evaluation report if within relevant time frame. Apart from the physical inspection, there is also the most recent financial report presenting Fixed Asset schedule which considers depreciation resulting in a written own value (WDV).
Again to iterate ' Determining the monetary worth or value of a ' used' asset especially for acquisition by prospective purchaser or disposal by the vendor) will specifically be dependent on the context, for which this value is sought.
@Dobui,
Thank you but can you please explain the concept of ' written own value (WDV)'
WDV - book value/net value after reducing the cost by the depreciation amount annually. For our tax regimes these figures are sighted in the Fixed Asset Schedules, to determine the value or consideration on disposal of business/fixed asset and the likes.
Ok, that is from a going concern accounting context, not really applicable to break-up or independent disposal purpose.
- Badges
- Science method
- Similar topics
- Biological Science
- Ecology