CONCEPT OF THE INVESTMENT PROPERTY FAIR VALUE MEASUREMENT
Journal Title: Науковий погляд: економіка та управління - Year 2018, Vol 1, Issue 59
Abstract
Methods for establishment assets and liabilities fair value measurement still remain a matter in dispute today. The national fair value measurement methodology is instantiated by unconformity and fragmentariness. When it comes to the domestic accounting system, we can meet the term Fair value only in the AR(S) 7: Fixed assets and AR(S) 19: Amalgamation (consolidation) of business, which definition repeats the words verbatim with the international standards. Discrete algorithm for the investment property fair value measurement is described in the AR(S) 32, § 17, 19 through 23. According to the said logarithm, valuation process shall be based upon active market prices, while in case if they are not available, be governed by the latest market or current market prices for the immovable properties with due consideration for the individual item peculiarities and application of the additional parameters. There are five steps of the investment property valuation method implementation. During Step 1 a valuation matter is defined and valuation date is specified. Step 2 assumes justification of the valuation basis from the perspective of a concept of the most beneficial and best ever practicable use, which is legally and financially grounded with due regard to strong properties of the item under valuation. Shortlist of the main and/or the most favorable market players is compiled during Step 3. During Step 4 classification of a market is provided for the purpose of valuation, whereby it is indentified as the main or the most favorable on the assumption of volume of business and market activities of the identical or similar items. The following information sources are used for market classification: general economical data, branch-specific information, basic rental fee levels, free spaces, real estate market prices according purchase and sale contracts / transactions. The data get thereby in terms of types and quality are systematized then by hierarchical levels of the investment property fair value measurement. During Step 5 the establishment shall select approach to and method for the fair value measurement, i.e. market, income- or cost-based. Determination of the conceptual approaches to selection of the fair value measurement methods, as well as systematization thereof allow developing the consistent algorithm for the investment property fair value calculation. Formalization of the get results for the purpose of developing the investment property valuation mathematical model is considered to be the promising trend in the further studies.
Authors and Affiliations
S. O. Slomchynska
Keywords
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- EP ID EP449974
- DOI 10.32836/2521-666X/2018-1-59-26
- Views 138
- Downloads 0
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