Methodological aspects of estimation of value of specialized property of enterprises

DOI

10.2991/mdsmes-19.2019.7How to use a DOI?

Keywords

Specialized property, special value, replacement or reproduction residual value, cost approach, revenue approach

Abstract

The author's vision of the process of valuation of specialized property of enterprises, namely, industrial technological lines, is presented. It has been established, that the current property valuation standards in Ukraine, in particular, National Standard 1 «General Principles of Property and Property Rights Valuation», foresees determination of the value of specialized property of enterprises, using such valuation bases as residual replacement or reproduction value, as well as market value. The valuation of these types of costs is envisaged solely through the use of a cost approach. The residual value of the replacement (reproduction) of the valuation object, foresees determination of the value of the property, minus all types of depreciation, determination of which, according our opinion, is correct, when the term of use of specialized equipment does not exceed 50% of the possible term of use. In this case, the calculated residual value of the replacement (reproduction) of the specialized property will be the most identical to the real value of the property at the current date. Meanwhile, the use of a cost approach to calculate the residual value of the replacement (renewal) of specialized property does not take into account the most important aspect of any current entity's activity - each asset must bring to its owner increased economic benefits. The questions of expediency of use of the accounting-analytical instrument, which is capable to take into account the income component during determination of the value of specialized property are examined. It is presented the method of determination of the fair value of specialized property. On the base of calculation and estimation of the special value of the property, as the amount of market value and its allowance. The latter is formed in the presence of atypical motivation or special interest of the potential buyer (user) in the object of evaluation. The questions of calculation of value of specialized property of the enterprise on the basis not only of cost approach are reviewed. For a more complete appraisal, it is also suggested to use an income approach, that provides more accurate results and corresponds to the principle of the most efficient use of property in assessing of its value. An instrument for determining the discount rate has been developed, which takes into account the peculiarities of the macroeconomic situation of the country, and the risks inherent to the use of specialized property of enterprises. As a risk-free rate, during determination of special value of specialized property in the country's stable economic condition, it is suggested to use the bond yields on domestic government bonds. to determine the special value of specialized property in the country's stable economic condition. In the unstable economic situation of the country, it is advisable to choose as a risk-free rate the proposed coefficient, based on the ratio of individual items of expenditure and revenues of the state budget of Ukraine, and reflects the intentions of the country's leadership to ensure minimum stability in the country. The proposed methodology and developed methodological instrument for valuation of fair value of specialized property, will allow correctly to make management decisions about the production potential of the enterprise, which will further ensure its competitiveness.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Ruslan Volchek
PY  - 2019/10
DA  - 2019/10
TI  - Methodological aspects of estimation of value of specialized property of enterprises
BT  - Proceedings of the 2019 7th International Conference on Modeling, Development and Strategic Management of Economic System (MDSMES 2019)
PB  - Atlantis Press
SP  - 31
EP  - 36
SN  - 2352-5428
UR  - https://doi.org/10.2991/mdsmes-19.2019.7
DO  - 10.2991/mdsmes-19.2019.7
ID  - Volchek2019/10
ER  -