Valuation And Some Terms Related To It

Valuation Of Properties

 

What is Valuation :-

Valuation is the art of assessing the fair present value of a Property at a stated time. Valuation of anything is an estimate of the value of that thing in terms of money. It only attempts at suggesting the fair prices. Yet, valuation is not an arbitrary process. It’s based on some facts and only after a judicious processing of those facts and indications, we are able to suggest the value or fair price f the property. Valuation is not the Cost of a Property.

Purposes of Valuation :-

The purpose of valuation of a property are different and may differ according to different cases. Some of the important purposes are as follows –
  1. Purchase for Investment or Occupation.
  2. Tax Fixation.
  3. Sale of a Property.
  4. Rent Fixation.
  5. Insurance Premium.
  6. Mortgage value or Security of Loans.
  7. Compulsory Acquisition.
  8. Speculation.
  9. Wealth Tax and Estate Duty.
  10. Gift Tax.
  11. Partition.
  12. Assessment of Income or Stamp Fees.
  13. Capital Gain Tax.

Scrap Value :-

Scrap Value is the sell value of dismantled materials of an asset at the end of it’s useful life. Scrap Value is counted in the calculation of depreciation of a property, generally @10% of the cost of the Structure. Scrap Value of an asset is merely sell value of scrap and has a limitation.

Salvage Value :-

Salvage Value is the Estimated Value of an asset without dismantling it at the end of it’s useful life. Ordinarily the Salvage Value influences in the calculation of depreciation is omitted by Scrap Value. Salvage Value deposition may take the form of a sell of asset to a purchaser who will continue to use it for the function for which it was originally designed.

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