Chapter 5 Flashcards
Lowest level of trade?
Manufacturer
Highest market value will be at which level of trade?
Consumer
Highest valuation method results in highest value for inventory
FIFO
First in /first sold
LIFO
Last in/first sold
Relationship between an object desired and potential purchaser?
Value
Appraisal process
Define problem Preliminary survey and planning Data collection and analysis Application of data Correlation Final value estimate
Return on the investment
Discount rate
Return of an investment which is capital recovery
Recapture rate
Actual rate
Effective tax rate
Each property be appraised as though it were being put to the most profitable use, give. Probable legal, physical and financial constraints
Highest and best use
Value of a property for a specific use
Value in use
The amount an informed purchaser would offer in exchange for property under normal conditions
Value in exchange
The cost of an item at the time it was initially acquired by original user
Historical cost
The cost to the present owner at a new or used purchase price
Original cost
Cost plus all other cost necessary to achieve normal utility of an asset or group of assets within an operating unit not including maintenance or other operating expenses
Installed cost
Cost required to replace the property unit with a new one of like utility in today’s market
Replacement cost new
Amount necessary to build an exact replica a of the property unit
Reproduction cost new
Amount actually paid or about to be paid in a particular transaction
Market price
Most probable price expressed in monetary terms that a property would bring if exposed for sale in the open market in an arms length transaction between a willing seller and will buyer
Market value
The purpose of depreciating in appraising is to provide for
Loss in value from all causes
Income is best suited for personalty type
Leases equipment
Accounting depreciation that require subtraction
Sum of the years
Straight line
The netbook value of personal property as reported in financial statements represents the
Cost less accounting depreciation
Fixed asset examples
Machinery and furniture
Which type of property can be considered real or personal depending on how it is affixed and used by owner?
Leasehold improvements made to a building by the lessee
Principle that states a rational buyer will pay no more for a property than cost if a reasonably similar alternative
Substitution principle
The single most important tool of appraisal of business personal prop is
Listing or return
Dividing the selling price of items comparable to the subject by their gross rental income
Gross income multiplier GIM
The unit cost required to replace the property unit with a new one if like utility in today’s market
Replacement cost
The number of years of age of the subject property as independent cared by its condition
Effective age
Loss on value due to obsolete or incorrect design
Functional obsolescence curable
Loss in value due to impairment of desirability or useful arising from economic forces outside the property
Economic obsolescence
Which rate does The governing body of a jurisdiction determine based on annual budget requirements and total assessed valuation
Tax rate
A more or less permanent or fixed location affecting the extent of tax ability of personal property is
Situs
The process where the assessor identifies all taxable property in the jurisdiction and ensures that it is included in the assessment roll
Discovery
A result of subtracting accumulated depreciation from historic or acquisition cost
Net book value
Accounting depreciation may be defined as a systematic process of
Cost allocation
The method of inventory cost accounting that results in the lowest ending inventory value in growing economy is
LIFO
