Market Value

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market Value (In-Situ)

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market Value (In-Situ) further assumes that the assets are treated as follows;

• The plant and equipment will remain as a whole in-situ in their existing location following sale.
• The value provided is the gross value and does not allow for any agent’s commission or other sale fees
• All plant and equipment valued will be available for sale at the one time

Market Value (Ex-Situ)

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market value (Ex-Situ) further determines that the assets are treated as follows:

• The plant and equipment has been valued as individual items for removal
• The value provided is the gross value and does not allow for any agent’s commission or other sale fees
• All plant and equipment valued will be available for sale at the one time

Market Value (On a continuing use basis)

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

The valuation further assumes that the assets will be sold by way of a private treaty sale where the assets will remain in their existing place and location, therefore, in-situ following sale.

Underlying the definition of Market Value on a continuing use basis is a presumption that the entity is a going concern without any compulsion, intention or need to liquidate, otherwise wind up its operations or undertake a transaction on adverse terms, and assumes that the earnings support the value reported. Similarly, to determine the market value of an asset under this circumstance, it is assumed that the asset is exchanged after an adequate period of marketing to obtain its best price.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Orderly Liquidation Value

The amount of gross proceeds which could be expected from the sale of the appraised assets, held under orderly sale conditions, given a reasonable period of time in which to find a purchaser(s) considering a completed sale of all assets, “as is and where is,” with the buyer assuming all costs of removal, with all sales made free and clear of all liens and encumbrances, with the seller acting under compulsion.

Forced Liquidation Value

The estimated gross amount, expressed in terms of money, that could be typically realized from a typically realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is where-is basis, as of a specific date.

Net Realisable Value

The value of an asset that can be realised by a company or entity upon the sale of the asset, less a reasonable prediction of the costs associated with either the eventual sale or the disposal of the asset in question.

Replacement with New Value

Replacement with New Value has been determined as at the date of valuation to allow for replacement by similar property in a condition equal to, but not better nor more extensive than, its condition when new.

For plant and equipment assets the valuation has regard to costs associated with the following:

• replacement of the asset including specialised equipment
• land or sea cartage and freight
• duty
• delivery
• design and commissioning
• engineering fees
• installation
• betterment or optimisation (if any)

Indemnity Value

Indemnity value is the cost necessary to replace, repair or rebuild the asset to a condition substantially the same as but not better nor more extensive than its condition at the time of the valuation. Factors taken into account include age, condition, remaining life and market values as well as delivery, installation and commissioning costs.

Property, Plant and Equipment

Property, Plant and Equipment are tangible items that are:

• Held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and
• Expected to be used during more than one period

An impairment loss

An impairment loss Is the amount by which the carrying amount of an asset exceeds its recoverable amount.

Residual Value

The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Useful Life

(a) The period over which an asset is expected to be available for use by an entity; or

(b) The number of production or similar units expected to be obtained from the asset by an entity.

Property Valuer

A person who is registered / licenced to carry out property valuations (real property) under the relevant State, Territory or Commonwealth legislation. Within Queensland valuers must be registered by Valuers Registration Board of Queensland. Other states require valuers to hold the qualification of either Australian Property Institute Certified Practising Valuer or Australian Valuers Institute Certified Professional Valuer. All PM Valuations Valuers conducting valuations of land and buildings have one of the above qualifications.

Plant and Machinery Valuer

A person who is sufficiently qualified and experienced to carry out plant and machinery valuations. Although not subject to State, Territory or Commonwealth legislation the qualification of Australian Property Institute Certified Practicing Plant and Machinery Valuer is highly regarded within Australia.

Plant and Equipment Valuer

A person who is sufficiently qualified and experienced to carry out plant and equipment valuations. Although not subject to State, Territory or Commonwealth legislation the qualification of Australian Property Institute Certified Practicing Plant and Machinery Valuer is highly regarded within Australia.

Property, Plant and Machinery Valuer

A person who is both registered to carry out property valuations and is also sufficiently qualified and experienced to carry out plant and machinery valuations.

PP&E

The commonly used abbreviation for Property, Plant and Equipment often used within the accounting profession.

P&M

The commonly used abbreviation for Plant and Machinery.

Note: The terms plant and machinery and Plant and equipment are generally considered interchangeable and simply a matter of preference within the valuation and related professions. The term plant and equipment is traditionally used within the accounting profession and the term plant and machinery is often used in some legal and insurance matters. The qualification of plant and machinery valuer is equivalent to plant and equipment valuer.

Real Property

All the rights, interests, and benefits related to the ownership of real estate. Real property is a legal concept distinct from real estate, which is a physical asset.

Carrying amount

The amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses.

Salvage Value

The value of an asset that has reached the end of its economic life for the purpose it was made. The asset may still have value for an alternative use or for recycling.

Highest and Best Use

The most probable use of a property which is physically possible, appropriately justified, legally permissible, financially feasible, and which results in the highest value of the property being valued.

Cost

Is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Australian Accounting Standards.

Depreciable amount

Is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation

Is the systematic allocation of the depreciable amount of an asset over its useful life.

Added Value of improvements

The montetary amount that buildings add to the market value of the land.

Adequate Profitability

When an asset has been valued by reference to depreciated replacement cost, adequate profitability is the test that the entity should apply to ensure that it is able to support the depreciated replacement cost conclusion.

Australian Property Institute

Australian Property Institute abbreviated API. The Australian Property Institute is a leading and contemporary membership organisation for property professionals that advise the community and business.

Arm’s length

A concept that implies the parties involved do not have any special or other business relationship which may influence the concept of a willing buyer willing seller.

Asset

A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Asset Management

A systematic appraoch to the procurement, maintenance, operation, rehabilitation and disposal of one or more assets which integrates the utilisation of assets and their performance with the business requirements of asset owners or users.

Australian Valuers Institute

Australian Valuers Institute abbreviated AVI. The Australian Valuers Institute is a leading and contemporary membership organisation for property professionals that advise the community and business. The Australian Valuers Institute is the only Australian based industry body that solely represents valuers. Institute aims to uphold the ethical standards of the valuation profession by ensuring that our members render service to their clients with fidelity, to practice their profession with integrity, honor and professionalism whilst acting impartially and objectively when providing independent advice.

Balloon Payment

The final payment terminating a debt, in which the amount paid is substantially more than previous installments.

Basis of valuation

The specific basis upon which a valuation assignment has been completed.

Betterment

An insurance term generally used to identify the potential improvements inherent in replacement assets following a loss. Such potential improvements are not usually allowed when assessing the insurable value of an asset either pre or post loss.

Business (Business Enterprise)

A commercial, industrial, service, or investment entity (or a combination thereof) pursuing an economic activity.

Capital Asset Pricing Model (CAPM)

A model in which the cost of capital for any stock or portfolio of stocks equals a risk-free rate plus a risk premium that is proportionate to the systematic risk of the stock or portfolio.

Capitalisation rate

The return represented by the income produced by an investment, expressed as a percentage.

Carrying Amount

The amount at which an asset is recognised in the financial statements of an entity after deducting any accumulated depreciation and any accumulated impairment losses.

Certified Practising Valuer

The highest property valuer qualification provided by the Australian Property Institute.

Certified Practising Valuer (Plant and Machinery)

The highest plant and machinery valuer qualification provided by the Australian Property Institute. This is the only designation for Plant and Machinery Valuers that requires relevant tertiary education as well as industry experience.

Certified Professional Valuer

The highest valuer qualification provided by the Australian Valuers Institute.

Contract Rent

The rent specified in a lease. May differ from the market rent.

Cost Approach

A valuation approach based on the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction.

Cost of Capital

The expected rate of return that the market requires in order to attract funds to a particular investment.

Current Assets

Cash and assets that are reasonably expected to be converted into cash within one year in the normal course of business.

Depreciated Replacement Cost Method

A method under the cost approach that indicates value by calculating the current replacement cost of an asset less deductions for physical deterioration and all relevant forms of obsolescence.

Discount Rate

A rate of return used to convert a future monetary sum or cash flow into present value.

Discounted Cash Flow Method

A method within the income approach in which a discount rate is applied to future expected income streams to estimate the present value.

Economic Life

The total period of time over which an asset is expected to generate economic benefits for one or more users.

Economic Obsolescence

A loss of utility caused by factors external to the asset, especially factors related to changes in supply or demand for products produced by the asset, that results in a loss of value.

Enterprise Value

The total value of the equity in a business plus the value of its debt or debt-related liabilities, minus any cash or cash equivalents available to meet those liabilities.

Equity

The owner’s interest in an asset or business after deduction of all liabilities.

Equitable Value

The estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interest of those parties.

External Obsolescence

A loss of utility caused by economic or locational factors external to the asset that results in a loss of value.

Financial Reporting Standards

Any recognised or adopted standards for the preparation of periodic statements of an entity’s financial position. These may also be referred to as accounting standards.

Functional Obsolescence

A loss of utility resulting from inefficiencies in the subject asset compared to its replacement that results in a loss of value.

Going Concern

A business enterprise that is expected to continue operations for the foreseeable future.

Goodwill

Any future economic benefit arising from a business, an interest in a business or from the use of a group of assets which is not separable.

Highest and Best Use

The use of an asset that maximises its potential and that is physically possible, legally permissible and financially feasible.

Impairment

A loss in the future economic benefits, or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation or amortisation.

Income Approach

A valuation approach that provides an indication of value by converting future cash flows to a single current capital value.

Initial Yield

The initial income from an investment divided by the price paid for the investment expressed as a percentage.

Intangible Asset

A non-monetary asset that manifests itself by its economic properties. It does not have physical substance but grants rights and economic benefits to its owner.

Internal Rate of Return

The discount rate at which the present value of the future cash flows of the investment equals the acquisition cost of the investment.

Investment Value

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives.

Lease

An agreement whereby a lessor grants the right to use an asset for an agreed period of time to a lessee in return for a payment or series of payments.

Lessee

A person or corporate entity to entitled to use an asset under the terms of a lease.

Liquidation Value

The amount that would be realised when an asset or group of assets are sold on a piecemeal basis. Liquidation Value should take into account the costs of getting the assets into saleable condition as well as those of the disposal activity. An orderly liquidation value assumes an orderly transaction with a typical marketing period. A forced liquidation value assumes a forced transaction with a shortened marketing period.

Market Approach

A valuation approach which provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available.

Market Participants

The whole body of individuals, companies or other entities that are involved in actual transactions or who are contemplating entering into a transaction for a particular type of asset.

Market Rent

The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion

Market Risk

Risk that affects an entire market and not just specific participants or assets. Market Risk cannot be diversified.

Market Value

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Modern Equivalent Asset

An asset which provides similar function and equivalent utility to the asset being valued, but which is of a current design and constructed or made using current materials and techniques.

Net Book Value

The capitalized cost less accumulated amortization or depreciation as it appears on the books of account of the business enterprise.

Net Present Value

The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.

Non-Current Assets

Assets that are held long term and intended for use by an enterprise in the production of goods or the delivery of services.

Non-operating Assets

Classes of assets that are not essential to the operations of a business, but may still generate income or provide return on investment.

Obsolescence

A loss of utility of an asset caused by either physical deterioration, changes in technology, patterns of demand or environmental changes that results in a loss of value.

Plant and Equipment

A class of tangible asset that is:

1. held by an entity for use in the production or supply of goods or services, for rental by others or for administrative purposes AND
2. expected to be used over a period of time.

Plant and Machinery

See Plant and Equipment

Present Value

The value, as of a specified date, of a future payment or series of future payments discounted to the specified date (or to time period zero) at an appropriate discount rate.

Rate of Return

An amount of income (loss) and/or change in value realised or anticipated on an investment, expressed as a percentage of that investment.

Real Property

All rights, interests and benefits related to the ownership of real estate.

Residual Value

The residual value of an asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life

Reversionary Value

The estimated value of an investment property at the end of a period during which the rental income is either above or below the market rent.

Reversionary Yield

The anticipated yield from an Investment Property once a the Reversionary Value is attained.

Salvage Value

The value of an asset that has reached the end of its economic life for the purpose it was made. The asset may still have value for an alternative use or for recycling.

Specialised Property

A property that is rarely if ever sold in the market, except by way of sale of the business or entity of which it is part, due to uniqueness arising from its specialised nature and design, its configuration, size, location or otherwise.

Summation Method

A valuation method that provides an indication of the value of an entire asset by the addition of the separate values of its component parts.

Synergistic Value

The result of a combination of two or more assets or interests where the combined value is more than the sum of the separate values. If the synergies are only available to one specific buyer then Synergistic Value will differ from Market Value, as the Synergistic Value will reflect particular attributes of an asset that are only of value to a specific purchaser. The added value above the aggregate of the respective interests is often referred to as “marriage value.”

Tangible Assets

Assets with a physical manifestation. Examples include land and buildings, plant and machinery, fixtures and fittings, tools and equipment, and assets in the course of construction and development.

Technical Obsolescence

A loss of utility resulting from inefficiencies in the subject asset compared to its replacement that results in a loss of value.

Terminal Value

The value at the end of an explicit forecast period of all remaining projected cash flows.

Trade Related Property

Any type of real property designed for a specific type of business where the property value reflects the trading potential for that business.

Unit of Account

IFRS Definition  (IFRS 13):  The level at which an asset or a liability is aggregated or disaggregated in an IFRS for recognition purposes.

Unit(s) of Comparison

A common basis of comparison used to analyse differences between assets. It may be based on a physical characteristic, eg a price per square metre or square foot, or an economic characteristic eg the ratio of a asset’s sale price to its net income.

Unsystematic Risk

A risk that is specific to a company or asset.  Can be diversified.

Useful Life

IFRS Definition from IAS 16:

(a) the period over which an asset is expected to be available for use by an entity; or

(b) the number of production or similar units expected to be obtained from the asset by an entity.

Utility

An expression of the degree of an asset’s usefulness.

Valuation

(1) The process of establishing the value of an asset or liability;

OR

(2) The amount representing an opinion or estimate of value