tejas.gaikwad.1044
Tejas Gaikwad
A procedure for determining an asset's value. The appraisal approach values assets based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets. A different dollar value will be assigned to an asset depending on which of these factors the appraiser primarily bases his or her estimate on. Sometimes the appraised value will not coincide with an asset's market value and buyers will often pay more or less than an asset's appraised value based on what the asset is worth to them. No matter which appraisal approach is used, an appraisal is only an educated guess as to what price the asset would fetch in a free market.
Appraisals are used to determine the worth of high-value assets such as real estate, jewelry, businesses and vehicles. They are usually performed in conjunction with a sale or for insurance purposes. For the results to be taken seriously, an appraisal must be conducted by an individual with expert knowledge of the asset being assessed. A diamond ring should be appraised by a jeweler, and a business should be appraised by a valuation firm.
Appraisal approach is about evaluating the price of an asset, which it would fetch in a free market. Appraisal Approaches are the procedures followed to estimate the market value of tangible or intangible assets. The approach is generally carried out to measure the worth of valuable assets like jewelry, vehicles and real estate. Estimation of value of such assets is necessary for their sale or insurance purposes. The appraised value is not always equal to the asset’s market value. The buyers have to pay for what the asset is worth to them.
Appraisal approach has 3 categories:-
1. Cost Approach:- In this approach, the value is estimated on the basis of costs incurred in making of the asset. It includes cost factors like manufacturing, transportation etc.
2. Income Approach:- The market value is estimated on the basis of income the asset generates.
3. Market Comparison Approach:- The worth of similar assets in the market is observed and it forms the basis of our asset value estimation.
Appraisals are used to determine the worth of high-value assets such as real estate, jewelry, businesses and vehicles. They are usually performed in conjunction with a sale or for insurance purposes. For the results to be taken seriously, an appraisal must be conducted by an individual with expert knowledge of the asset being assessed. A diamond ring should be appraised by a jeweler, and a business should be appraised by a valuation firm.
Appraisal approach is about evaluating the price of an asset, which it would fetch in a free market. Appraisal Approaches are the procedures followed to estimate the market value of tangible or intangible assets. The approach is generally carried out to measure the worth of valuable assets like jewelry, vehicles and real estate. Estimation of value of such assets is necessary for their sale or insurance purposes. The appraised value is not always equal to the asset’s market value. The buyers have to pay for what the asset is worth to them.
Appraisal approach has 3 categories:-
1. Cost Approach:- In this approach, the value is estimated on the basis of costs incurred in making of the asset. It includes cost factors like manufacturing, transportation etc.
2. Income Approach:- The market value is estimated on the basis of income the asset generates.
3. Market Comparison Approach:- The worth of similar assets in the market is observed and it forms the basis of our asset value estimation.