8. VPS 2 - Bases of value, assumptions and special assumptions

Question 1

What is VPS 2?

Answer 1

Bases of value, assumptions and special assumptions

Question 2

What are the 7 basis of value?

Answer 2

1) Market Value
2) Market Rent
3) Fair Value (IFRS13)
4) Investment Value
5) Equitable Value
6) Synergistic Value
7) Liquidation Value

Question 3

Define market value and market rent

Answer 3

Question 4

Define Fair Value (IRFS13)

Answer 4

“The price that would be received to sell ad asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”

The RICS view is that this definition is generally consistent with the definition of market value

Question 5

Define Investment Value

Answer 5

“The value of an asset to a particular owner, or prospective owner for individual investment or operational objectives”

• May differ from MV
• This is sometimes used as a measure of worth to reflect the value against the client’s
• Own investment criteria

Question 6

What are assumptions and special assumptions?

Answer 6

Assumptions: Reasonable for value to accept something is true without the need for specific investigations

Special Assumption: Supposition that is taken to be true, eventhough it is not

Must be agreed with client in writing at commencement of instruction e.g. VP