ISW on "Business valuation methods": Kazakhstani Standard “Valuation of movable property” Done by: Beisebayeva S. Talkanbay K. Group: F-1002
General Provisions The standard was developed based on the Law of the Republic of Kazakhstan "On appraisal activities in the Republic of Kazakhstan " and in accordance with international valuation standards , establishes the basic requirements for methods of assessment of personal property and is required for use on the territory of the Republic of Kazakhstan. The basic principles of valuation are objectivity and credibility. Type of evaluation is mandatory and proactive assessment. The action applies to the standard evaluation of all types of tangible personal property.
General terms 1) personal property ( movable things and values ) - it's money , securities and other assets not related to real estate; 2 ) vehicle - registered in the territory of the Republic of Kazakhstan rail, road, sea , inland waterway, air , electric city , including the underground, as well as in the territory of the Republic of Kazakhstan main pipeline transport ; 3) plant, machinery and equipment - tangible assets that an organization holds for use in the production, supply of goods or services , for rental to others , or for administrative purposes , including individual machines or groups of machines , vending supplies , tenant improvements and other properly identified categories of assets ; 4) Commercial equipment and accessories tenant - Non- Real Estate accessories that are attached to the property of the tenant and used them in the conduct of a trade or business ; 5) The tenant improvements - fixed improvements or additions to the land or buildings, installed and paid by the lessee to meet their needs , usually eliminated by the lessee at the end of the lease term. Their removal does not cause serious damage to property ; 6) Office equipment - furniture , computer equipment , communications equipment , etc. ; 7) biological assets - movable to biological assets include adult working and productive livestock ; 8) collectibles - a broad term used to describe the objects collected in connection with the interest that they cause because of their rarity , originality or uniqueness. This term may be used among other things to works of art , antique objects, precious stones , jewelry, musical instruments , numismatic or philatelic collections , rare books and archival materials ; 9) the cost approach in the evaluation of works of art - an approach to determining the value of works of art are treated as a substitute for the purchase of works of art the ability to create another work of art, which will replace the present.
Cont. 10)Replacement of old object new - the cost of buying the same object as the estimated or , if not possible , then purchase similar in nature and state of the object in the retail market , which exhibited new works of art. 11)Replacement by buying on the secondary market - the replacement cost of the estimated object similar properties in a similar position in the secondary retail market , selling works of art or antiques. 12)Replication - a copy of the original ( estimated ) of the object , which in terms of its nature , quality and limitations of materials as close as possible to the original, but is made with the use of modern methods of creation. 13)An exact copy - an identical copy of the original assessed , created from materials as close as possible on the nature , quality and limitations , using the methods of creation, applied during the manufacture of the original; 14 ), a specialized property - property that is rarely , if ever , sold in the market except through the sale of a business or organization , of which it is part , because of its uniqueness, due to its specialized nature and design, configuration , size, location and other properties; 15) operating assets - an asset that is considered necessary for the basic functioning of the enterprise constantly ; 16) generating unit - the smallest identifiable group of assets that generates cash inflows that are largely independent of those from other assets or groups of assets ; 17) the corporate assets - assets that are not capable of independently of other assets or groups of assets to produce cash inflows , but that their carrying amounts may not be fully allocated to the cashgenerating unit ( for example, passenger vehicles , laboratory and office equipment) ; 18) braking coefficient ( Chilton ) - an indicator of the degree of change in the calculation of the cost , depending on the differences in the basic parameter assessed personal property from the analog value is known.
Assessment methods Establishing a market value of movable property is made by the use of valuation techniques that are grouped into a profitable , cost and comparative approaches. The methods of the income approach - methods for determining the value of the object of movable property , based on the definition of the expected revenue from its use in the future : 1) discounted cash flow method - valuation based on the conditions and uneven changes in the cash flows , depending on the degree of risk associated with the use of movable property for commercial purposes; 2) direct capitalization method - valuation based on the conditions of use of the object of maintaining stable estimates for uniform value of income in unlimited periods of time; 3 ) the method of capitalization growth models - the valuation basis of the conditions for maintaining the sustainable use of the subject being evaluated at regular intervals increases the amount of income in the unlimited or limited periods of time, similar to the direct capitalization method , but unlike it to capitalization ratio is not comparable approach of market data and is calculated on the basis of the required rate of return on capital.
Methods of cost approach - methods of determining the cost of a full replacement or displacement of an object estimates net of all kinds of wear and tear. Methods of cost approach can be divided into 2 groups: Group 1: Methods based on direct methods of determining the costs are applied to estimate the cost of vehicles manufactured inhouse. They are: 1 ) the method of calculating the cost element by element , which is the sum of the cost of individual elements of an evaluation, the cost of their purchase, transportation and labor for profit ; 2) the method of analysis and indexing of existing calculations , which is to determine the value by indexing the cost items included in the calculation , on economic elements ( cost of materials, components , salary workers and indirect costs ) , thus leading them to the current level of prices; 3 ) the method of calculating the cost of close-up , which is to determine the value by calculating the total cost of production on the integrated standards of production costs , taking into account the profitability of production.
Group 2: methods based on indirect methods of determining the costs are applied to estimate the cost of new vehicles. They are: 1) substitution method or A parametric method , which is based on the principle of replacement and selection of objects is similar to the evaluated and utility functions. This method allows on the basis of known values and the technical and economic characteristics of the objects analog to count the cost of the estimated object ; 2) index method , which consists in adjusting the carrying amount of the corresponding index ; 3) the method of unit pricing is to calculate the cost based on unit pricing , that is, the price per unit of the main parameters ( performance, power , etc. ) , weight or volume.
Methods of comparative approach - methods based on the analysis of sales transactions objects analog and comparison with the object of evaluation for appropriate adjustments : 1) an active market - the valuation of personal property by the use of information on sales prices published in the price lists of manufacturers , dealers , or other sources of information on selling prices ; 2) the method of comparative analysis of sales - definition of value by comparing recent sales of comparable movable property with the assessed object after making appropriate adjustments to take account of the difference between them; 3) statistical simulation method (the method of mass appraisal) way of looking at the estimated object movable property as a representative of a certain set of similar items for which prices are known ; 4 ) the method of correlation models - a way to assess the object of movable property, based on the determination of the weighted average of the parameter in units characterizing the feasibility of the estimated object properties and associated proportional relationship with its value.
Requirements for methods of assessment The selection and application of methods for assessing the appraiser shall observe the following requirements: 1) identify the purpose of evaluation and type defined value; 2) ensure the accuracy of the information used in the assessment of personal property; 3) conduct a legal analysis identifies property rights and encumbrances; 4) justifies the choice of assessment methods; 5) provides a comprehensive and accessible presentation of the evaluation report reliable data and reasonable estimates of the results unambiguously interpret them.
The order of evaluation Job Definition in the evaluation: 1) identification of the estimated property (inspection on the spot); 2) identification of property rights; 3) clarification purposes (the scope of use) assessments; 4) the establishment of the basis of valuation and the kind of value; 5) approval of the valuation date; 6) Identification of other constraints; 7) the conclusion of the agreement on evaluation. Preliminary analysis , sampling and data collection: 1) the collection, processing and analysis of documents and other information about the object of evaluation; 2) an analysis of the supply and demand for a similar property.
The calculations in the application of the approaches and methods of assessment to establish the market value of the property or other assessment performed by the following methods of assessment: 1) market approach; 2) the income approach; 3) the cost approach. Reconciliation of the results obtained by applying the methods of evaluation, and determination of the final project cost estimates. The evaluator is based on its judgment in determining the relative weight that should be attached to each of the calculated values of the value obtained in the evaluation process. If such requirements valuer is the rationale and justification for the used evaluation methods, and for the weighting of the results of the methods by which it relied in reaching the conclusion that value.
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