PRC Appraiser key terms

A professional service in which a qualified valuer estimates the value of an asset or liability at a specified date, following recognized standards and reporting the result with stated assumptions and limiting conditions.

The category of value being estimated, such as market value, investment value, or liquidation value. It determines the premises, data, and methods the valuer applies.

The estimated amount for which an asset would exchange on the valuation date between a willing buyer and a willing seller, each acting knowledgeably and without compulsion, after proper marketing.

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives, which may differ from market value because it reflects that party's specific circumstances.

In accounting measurement, the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, viewed from a market perspective.

The specific point in time to which the value conclusion applies. All market conditions, data, and assumptions are taken as of this date, not the report issuance date.

Stated conditions taken as true for the valuation, such as continued use or a simulated transaction. Assumptions must be reasonable, disclosed, and consistent with the chosen value type.

An assumption that the enterprise or asset will continue operating in its current manner and purpose, without forced liquidation, so values reflect ongoing use rather than break-up proceeds.

The amount that could be realized from selling assets under forced or orderly liquidation conditions, typically below market value because of time pressure and reduced buyer pool.

A valuation method that estimates value by calculating replacement or reproduction cost of the asset and deducting accumulated depreciation from physical, functional, and economic obsolescence.

The cost to acquire or construct a new asset with equivalent utility at current prices and technology, used as the starting point in the cost approach.

Loss of value from wear and tear, aging, or physical deterioration of an asset through use or exposure, measured by observation, usage records, or age-life formulas.

Loss of value because an asset is less efficient, more costly to operate, or technically outdated compared with newer alternatives available on the valuation date.

Loss of value caused by external factors such as reduced demand, oversupply, or regulatory change, independent of the asset's own physical or design condition.

A valuation method that estimates value by comparing the subject with recent transactions or quoted prices of comparable assets and adjusting for differences in time, location, and characteristics.

A transaction involving an asset similar enough to the subject that its price, after adjustment for differing terms and characteristics, provides evidence of the subject's value.

A valuation method that converts expected future benefits, such as cash flows or rents, into a present value using a discount rate reflecting time and risk.

The rate used to convert future cash flows to present value, reflecting the time value of money plus a return for the risk specific to those cash flows.

A divisor applied to a single representative year's income to estimate value, implicitly reflecting growth and risk; used when income is expected to be stable or grow steadily.

A market approach technique that adjusts prices from completed transactions of similar assets using correction coefficients for date, condition, and other differences.

A government-published average land price for a defined area and use at a set date, serving as a reference from which individual parcel values are adjusted.

A real property technique that values land or a project by subtracting estimated development costs and developer profit from the projected completed value, then discounting to the valuation date.

A land valuation technique setting a standard price per frontage metre for a street, then adjusting for depth, width, and shape to value individual lots along it.

A non-monetary asset without physical substance that is identifiable and controlled by the entity, such as patents, trademarks, software, or customer relationships, and expected to bring future economic benefits.

The excess of the purchase price over the fair value of identifiable net assets acquired, arising from synergies, reputation, workforce, and other factors that cannot be separately identified.

The total value of a business as a going concern, typically the sum of equity value and interest-bearing debt minus cash, reflecting the operating assets that generate free cash flow.

Cash available to all capital providers after operating expenses, taxes, and reinvestment in working capital and fixed assets, discounted at the weighted average cost of capital.

The blended required return on a firm's debt and equity, weighted by their market-value proportions, used as the discount rate for enterprise free cash flow.

A measure of how much a stock's returns move relative to the overall market, used in the capital asset pricing model to estimate the cost of equity.

A model stating that required return on equity equals the risk-free rate plus beta times the market risk premium, used to estimate discount rates for valuation.

Valuation performed to support accounting measurements such as purchase price allocation, impairment testing, or fair value disclosure, governed by accounting standards as well as valuation standards.

A reduction in an asset's carrying amount when its recoverable amount falls below book value, requiring recognition of a loss in the income statement.

The higher of an asset's fair value less costs of disposal and its value in use, used as the ceiling for the carrying amount in impairment testing.

An accounting principle under which revenues are recognized when earned and expenses when incurred, regardless of when cash is received or paid.

The process of recording revenue when control of promised goods or services transfers to the customer, in the amount of consideration expected to be received.

The sum of discounted future cash inflows minus the initial investment; a positive result indicates the project adds value at the chosen discount rate.

The discount rate that makes a project's net present value equal to zero, representing the project's expected compound return over its life.

The formal written output of a valuation engagement, stating the subject, value type, date, methods, assumptions, and conclusion, and signed by responsible valuers.