Cost approach: Difference between revisions

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imported>Doug Williamson
(Link with Income approach page.)
imported>Doug Williamson
(Make wording clearer.)
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A valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).
''Financial reporting - fair value''.
 
IFRS 13 Fair Value Measurement defines a 'cost approach' as a valuation technique that reflects the amount that would be required currently to replace an asset with a comparable asset which would provide the same future stream of services.
 
 
A cost approach to fair value identifies the price that would be received for the asset based on the cost to a [[market participant]] buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.
 
 
This is sometimes known as the current replacement cost.





Revision as of 14:59, 1 August 2015

Financial reporting - fair value.

IFRS 13 Fair Value Measurement defines a 'cost approach' as a valuation technique that reflects the amount that would be required currently to replace an asset with a comparable asset which would provide the same future stream of services.


A cost approach to fair value identifies the price that would be received for the asset based on the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.


This is sometimes known as the current replacement cost.


See also