“Valuing Tangible Non Current Assets Is Subjective And Complex And Can Therefore Result In Different Companies Valuing Similar Assets Very Differently”

1373 words - 6 pages

“Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently”
Financial reporting attempts to measure the worth of assets, a concept that is inherently subjective and arbitrary. We can never know the true value of an asset, and rather than being an objective truth, valuations are always biased. Financial reporting is used for different purposes by different users and so each different way might be appropriate in different circumstances and values are affected by the purpose of measurement. Property, plant and equipment are the main non-current assets that a company holds. Similar assets can be valued ...view middle of the document...

A company should be consistent in its approaches to valuation but this is not always the case.

The main problem with this method of valuation is that by their very nature historical costs of assets are always out-of-date, and can provide no guide to an entity’s current financial position. There are often large differences between the historical cost of a non-current asset and its fair value, which is defined as “the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.” This particularly applies to property held by companies, and to deal with this many undergo regular revaluation to determine their fair value. Property is often compared to the current market price and revalued accordingly. While this may be a better indication of the asset’s worth at a particular point in time, market prices are very volatile and fluctuate regularly.
In the question Enigma had its property revalued in line with recent increases in market values. An independent surveyor was used so that the valuation was unbiased, however the value of property is still very subjective, and could change due to a large number of factors.
The fair value of assets can be determined in other ways, such as finding out its current replacement value for the company, what a third party would charge for the asset, or by simply estimating the value. It cannot be determined which one of these is the ‘true value’, each will be correct for the basis that has been used. These different methods would give different results and the best method to use depends heavily on who the financial information is for.
Enigma manufactured its own item of plant for its own use, which is valued at the cost to the company of making and bringing the item of plant into use. The realisable value of the item of plant is likely to be lower than what it cost Enigma to produce and its value to Enigma. This is due to the fact that non-current assets that have been made within the company are typically very particular to that business. They are of limited use and value to other companies, unless those parties buy the business.

Subsequent expenditure can be added to the cost of the asset if it will produce economic benefits beyond its originally assessed performance. Determining whether something adds value to the asset is subjective and the benefit can only be estimated.
Depreciation is the systematic expensing of the cost of an asset over the period which benefits from its use. There are two methods of depreciation allowed under International Accounting Standards: straight-line depreciation – where depreciation is spread evenly over the entire useful life of the asset, and reducing balance depreciation, where depreciation is charged more heavily in earlier years and levels out to the residual value. Choice is a question of judgement. The difference between the acquisition cost and the disposal revenue is the depreciable amount.(2)...

Other assignments on “Valuing Tangible Non-Current Assets Is Subjective And Complex And Can Therefore Result In Different Companies Valuing Similar Assets Very Differently”

Using Material From Item A And Elsewhere, Assess The Claim That Gender Differences In Educational Achievement Are Primarily The ‘Result Of Changes In Wider Society

1056 words - 5 pages January 2010 Item A Although the educational performance of both girls and boys has improved over the past twenty years, a significant gender gap in achievement has developed. Girls now outperform boys in most subjects and at most levels of education. This is especially true of pupils at GCSE where 10% more girls than boys achieve five or more A* – C grades. Some sociologists claim that gender differences in achievement are the result of

Business And Non Business Novel Synthesis

1721 words - 7 pages agree with this statement. This can be seen when Pink discusses the different forms and types of management in his novel. Pink claims that most businesses are run under a similar philosophy of “carrots and sticks”. In other words, motivators are put in place for both stellar work and poor performance. Pink describes this system as “management 2.0” and he argues that it is inferior to his proposal, which he calls “management 3.0”. Pink uses the

Scientific Investigation And Non-Scientific Investigation

1386 words - 6 pages questions can be answered using the principles of model test and improvement. The above example approach the scientific investigation and the below example will show what is non-scientific investigation for the sample example. The most useful evaluation of ads comes from mail order returns. To define whether an ad with a picture sells more gizmos than one of the same size with only text, one simply has to gather some data: place one ad in half the

The View That Working Class Children Cultural Deprivation Is The Reason Of Their Underachievement Can Be Very Rightly True

519 words - 3 pages The view that working class children cultural deprivation is the reason of their underachievement can be very rightly true. Cultural deprivation is the lack of certain rules of behavior in social situations, values, belief that something is a worthwhile, attitude and skills these are all of what society calls “normal”. Working class children are less likely to succeed in life because they are less likely to be found in nursery schools, less

Strength And Weakness Of Current Healthcare System

311 words - 2 pages healthcare reimbursement system is very complex. It involves private and public payers and changes in the reimbursement approach of one payer have implications for the other. One feature lacking in both type of payers is reimbursement linked to quality. Payment is based on delivery of services: “Right or Wrong”. The current system does not promote quality care and most services for preventive care are not reimbursed. Those components don’t

How Does Knowledge Of The Foundations And History Of Nursing Provide A Context In Which To Understand Current Practice?

606 words - 3 pages that the nursing profession was mainly held by men prior to 1800s even though the majority of nurses in the United State predominantly women these days. In the earlier era, I don’t think we can even call the nursing job as a profession because those men were mainly fulfilling the calling to aid the sick and poor from military, lay and religious orders. One interesting fact is that the first nursing school was established in India in about 250 B.C

How Can The Government Encourage Participation In Sports And Physical Education Among The Elderly And Handicapped?

514 words - 3 pages How can the government encourage participation in sports and physical education among the elderly and handicapped? A handicapped person is one who has some condition that markedly restricts their ability to function physically or mentally or socially while an elderly person may be defined as someone who is old or past the middle age. In today’s society both of these persons are considered disabled. These are people who have had little or no

Meaning Of Alcohol In Five Different Societies: Native Americans, Maori, Chinese, French And Russian

3356 words - 14 pages ). Nevertheless, binge drinking is relatively frequent in Russia; it may cause a heart attach which can lead to the death, therefore, alcohol control has to be a key priority for Russian nation (Bobak, 1999:862). In conclusion, essay aimed to explain that different meanings of alcohol exist among different societies; different culture, history, and economic status are important reasons for that. It is believed that in all times different types

Assessment Of Current Strategic And Leadership Challenges For Apple Inc

1146 words - 5 pages is to continuously innovate in the tech-world, deliver market-smashing returns and compete with fierce up-coming companies by offering the right prerequisites for a sustainable competitive advantage, and successfully facing the “challenges that the world is bringing” . The new CEO’s responsibility is to exceed Steve Jobs’ ability to look through different aspect lenses and have the competence to scale-up the business by creating future profit

Lab 6 Of 6: Staying Current And Troubleshooting Windows Xp

685 words - 3 pages Week 7 Lab Lab Title: Lab 6 of 6: Staying Current and Troubleshooting Windows XP Prepare this Lab Report when you have completed and lab assignment. Include any charts, graphs required to complete the lab. Refer to your initial lab plan to respond to the first questions. 1. Define the problem you were solving in this lab. (If any) • Part A: You are to apply the latest service pack for Microsoft Windows XP and download at least two hot

Frederick Taylor’S ‘Scientific Management’ Was For A Different Time And A Different Place

2625 words - 11 pages intrapreneurship, leadership etc. it is possible to achieve perfect productivity and improve from the worst to the best. Therefore, in conclusion, Frederick Taylor’s Scientific Management can be relevant for our modern world only if it is viewed as an ever-changing and still developing system. In this essay, I argued that Scientific Management plays a very important role in the 21st century. I also argued that today’s management practice is derived from the

Similar Documents

Regulation Of Below Rail Infrastructure Assets In Queensland: What Can We Learn From The Canadian Experience?

7299 words - 30 pages may face in Queensland, as they have faced and continue to face very similar issues in a very similar context concerning Railway regulation. Defining the economic principles of natural monopoly infrastructure assets and the benefits/costs of privatisation Monopolies arise when there is only one seller in the market, many buyers, no close substitutes for the product and barriers to entry into the market. (McTarggart, Findlay, Parkin, 2010

Gandhi And Non Violence Essay

1556 words - 7 pages biggest love and kindness. Divinity has infinite potential and transformation. Once a person realizes his own divinity in his heart, he will have great spiritual strength. Therefore, that person will be willing to help others. If this person helps the individual who is on the wrong road in a non-violent way, then this individual will find hidden divinity. In the history, comments on Gandhi’s non-violence are complex and controversial. Lenin believed

Current Economic Conditions And Macroeconomic Policy In China

339 words - 2 pages Today , the macroeconomic conditions of our country is not so serious . After 30 years’ reform, our country has already started to build up some policy in order to control economical system .At present ,financial crisis is becoming a heated issue. Under suchconditions , it is important to figure out what can be done by our country onfiscal policy and monetary policy to achievement objective of the economy

Verbal And Non Verbal Communication Essay

782 words - 4 pages knowledge on what we are communicating about. A good way to practice good communication is to get feedback from someone else. For example good communication skills with someone who has a hearing disability it is important to speak clearly and slow enough to where if they have to read your lips that they can. For good communication it is important that we can conform to the person we are relaying the message to. We can often be misunderstood in a