Systemic causes of discrepancies in the valuation of an industrial asset by the independent approaches and the recommendations for the valuation results harmonizing

Abstract

The assessment of the value of industrial assets is carried out to make decisions when forming complexes of these assets as part of the businesses of acting enterprises, as well as when creating the assets themselves, when purchasing them, when decommissioning for recycling and for the other assignments. The valuation error and the discrepancy between the value of these assets found by independent approaches indicates the quality of the valuation. The base of the error determining in estimating the value should be adjusted depending on the age of the industrial asset and it accumulated depreciation, since the value of asset within it lifetime decreases to zero with age and therefore this cannot serve as a base for finding of the value relative error. The causes for the discrepancy between the value of an industrial asset and its value found by independent approaches are both the approximateness of the initial data, which, when assessed, replace the characteristics of the general system, in which the assessed asset enters as the subsystem, and the methodological differences of the value normative concept and the value as the set of methods of it determining by the independent approaches. For adjusting the results found by each independent approach, an analysis is carried out of their compliance with the adequate methodological concepts of valuation and the performances of industrial asset. Taking into account the property of accumulation of the depreciation and the limited durability of the asset, the distribution of it values got by the cost and the income approaches, when harmonizing they, can be rationalized using the considered method. After an expert determining of the weight coefficient of the result got by the comparable sales approach, the contributions of the independent results got by cost and income approaches are adjusted in proportion to the transfer of accumulated net income to the value of property complex to which the industrial asset belongs as element of the system.