Draft IVSC guidance note on plant and equipment

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17 Sep 2004

The International Valuation Standards Committee (IVSC) has invited comment on a proposed Valuation Guidance Note 3 Plant and Equipment (PDF 203k).

The draft discusses various approaches to valuing plant and equipment and provides guidance for valuations that meet the requirements of accounting standards, particularly IAS 16 Property, Plant and Equipment. The draft points out that the measurement objective for financial reporting purposes is generally market value, defined as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion". The draft notes that "although the concept, use, and application of non-market bases of value may be appropriate under certain circumstances, the valuer is responsible to ensure that if such value is to be found and reported, it will not reasonably be construed as a representation of market value". Comments are due 31 October 2004.

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