Financial reporting standards: is market value for the existing use now obsolete? International valuation standards put into practice
| DOI | https://doi.org/10.1108/14635780010324358 |
| Date | 01 April 2000 |
| Pages | 212-224 |
| Published date | 01 April 2000 |
| Author | John Dunckley |
| Subject Matter | Property management & built environment |
JPIF
18,2
212
Journal of Property Investment &
Finance, Vol. 18 No. 2, 2000, pp. 212-
224. #MCB University Press,
1463-578X
CONFERENCE PAPERS
Financial reporting standards:
is market value for the
existing use now obsolete?
International valuation standards put
into practice
John Dunckley
Darroch Ltd, Dunedin, New Zealand
Keywords Standards, Valuation, Financial reporting
Abstract This paper backgrounds the recent changes to international financial reporting
standards and some possible impacts on current valuation practices. Specifically, it debates issues
surrounding the existing use principle and its ability to provide the required information for
financial reporting. Also discussed is the role that interaction and debate between international
bodies, such as IVSC and IASC, has in the resolution of such issues.
1.0 Introduction
International valuation standards require that, when valuing property for
financial reporting purposes, property be categorised by use and valued
accordingly:
(1) Property held for continuing use
.be valued at market value for the existing use (MVEU) where there is
a market; or
.depreciated replacement cost (DRC) where there is no market.
(2) All other property is to be valued at net market value.
International debate has heightened since the removal of the MVEU concept
from international accounting standard (IAS) 16. This raises a number of
questions, and challenges existing international practice.
The background documentation currently available on this change is:
.IVSC Commentary No 1998/1, ``Removal of market value for the existing
use concept in IAS'', which explores the principle of MVEU as
historically set out in both the accounting and valuation standards.
.IAS 16, ``Property, plant and equipment'', dated September 1998, deletes
all reference to MVEU and also to the recoverable amount test.
.IAS 36, ``Impairment of assets'', which picks up the recoverable amount
test.
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