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Fair value accounting (also called replacement cost accounting or current cost accounting) was widely used in the 19th and early 20th centuries, but historical cost accounting became more widespread after values overstated during the 1920s were reversed during the Great Depression of the 1930s.
Under the cost approach, also called the "human resource cost accounting method" or model, there is an acquisition cost model and a replacement cost model. Under the value approach , there is a present value of future earnings method, a discounted future wage model, and a competitive bidding model.
Equivalent annual cost. In finance, the equivalent annual cost ( EAC) is the cost per year of owning and operating an asset over its entire lifespan. It is calculated by dividing the negative NPV of a project by the "present value of annuity factor": , where. where r is the annual interest rate and. t is the number of years.
Tobin's q[ a] (or the q ratio, and Kaldor's v ), is the ratio between a physical asset 's market value and its replacement value. It was first introduced by Nicholas Kaldor in 1966 in his paper: Marginal Productivity and the Macro-Economic Theories of Distribution: Comment on Samuelson and Modigliani. [ 1][ 2] It was popularised a decade later ...
Replacement cost method: Estimations are performed on the basis of the costs that would be spent to obtain an equivalent patent asset with similar use or function. In both methods, present prices are taken into account, i.e. the expenditures as of the valuation date and not the historical costs when these actually happened. [7]
The discounted cash flow ( DCF) analysis, in financial analysis, is a method used to value a security, project, company, or asset, that incorporates the time value of money. Discounted cash flow analysis is widely used in investment finance, real estate development, corporate financial management, and patent valuation.
Replacement value. The term replacement cost or replacement value refers to the amount that an entity would have to pay to replace an asset at the present time, according to its current worth. [ 1] In the insurance industry, "replacement cost" or " replacement cost value " is one of several methods of determining the value of an insured item.
Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. The cash flows are made up of those within the “explicit” forecast period , together with a continuing or terminal value that represents the cash flow ...