Miscellaneous 2015

Pitfalls in the valuation of specialised in situ fixed assets for tax and duty purposes

Source: The Tax Specialist Journal Article

Published Date: 1 Jun 2015


The valuation of specialised in situ fixed assets, such as a steel plant or an airport, is a complex and often controversial valuation exercise, but has important tax and duty consequences. The commonly-adopted bottom-up valuation approach, which assesses the market value of the collection of specialised in situ fixed assets as the sum of the assessed market value of the building improvements plus the assessed market value of the underlying land, however, has at least three pitfalls. First, it implicitly and incorrectly assumes that the going concern business which employs the specialised in situ fixed assets always has material goodwill value. Second, it overlooks the evolutionary nature of asset value. Third, it overlooks the relationship between size and highest and best use in assessing the value of the underlying land component. This article examines these problems in turn and suggests solutions designed to achieve a correct valuation outcome.

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  • Published By: Hung Chu
  • Published On:1 Jun 2015

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Miscellaneous 2015

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