Depreciation Replacement Cost Method
RICS Valuation Faculty
The Depreciated Replacement Cost Method of Valuation for Financial Reporting
Valuation Information Paper 10
Produced in association with
Valuation Information Paper No. 10 The DRC Method of Valuation for Financial Reporting
Acknowledgements RICS would like to thank Kingston University School of Surveying for their help in preparation of this Paper. Extracts from the ‘International Valuation Standards 2007’ are reproduced in this publication with the permission of the International Valuations Standards Committee which holds the copyright. This Valuation Information Paper is effective from 1 July 2007.
Published by The Royal Institution of Chartered Surveyors under the RICS Books imprint Surveyor Court Westwood Business Park Coventry CV4 8JE UK www.ricsbooks.com No responsibility for loss or damage caused to any person acting or refraining from action as a result of the material included in this publication can be accepted by the author, publisher or RICS. ISBN 978 1 84219 329 7 © The Royal Institution of Chartered Surveyors (RICS) June 2007. Copyright in all or part of this publication rests with RICS, and save by prior consent of RICS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying or otherwise, now known or to be devised. Typeset in Great Britain by Columns Design Ltd, Reading
Contents
RICS Information Papers 1 2 3 4 5 6 7 8 9 10 11 11 Introduction What is DRC? When is DRC used? Valuer qualifications Settling the terms of engagement Assessing replacement cost The site value of a specialised property Calculating the cost of the buildings and site improvements of a specialised property Assessing depreciation Other considerations Final reconciliation Reporting Appendix A – Checklist Appendix B – PS 5.4, 5.5 and 5.6 iv 1 2 3 5 6 7 8 10 13 18 19 20 21 23
EFFECTIVE FROM 1 JULY 2007
VALUATION INFORMATION PAPER NO. 10
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RICS Information Papers
This is a Valuation
The Depreciated Replacement Cost Method of Valuation for Financial Reporting
Valuation Information Paper 10
Produced in association with
Valuation Information Paper No. 10 The DRC Method of Valuation for Financial Reporting
Acknowledgements RICS would like to thank Kingston University School of Surveying for their help in preparation of this Paper. Extracts from the ‘International Valuation Standards 2007’ are reproduced in this publication with the permission of the International Valuations Standards Committee which holds the copyright. This Valuation Information Paper is effective from 1 July 2007.
Published by The Royal Institution of Chartered Surveyors under the RICS Books imprint Surveyor Court Westwood Business Park Coventry CV4 8JE UK www.ricsbooks.com No responsibility for loss or damage caused to any person acting or refraining from action as a result of the material included in this publication can be accepted by the author, publisher or RICS. ISBN 978 1 84219 329 7 © The Royal Institution of Chartered Surveyors (RICS) June 2007. Copyright in all or part of this publication rests with RICS, and save by prior consent of RICS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying or otherwise, now known or to be devised. Typeset in Great Britain by Columns Design Ltd, Reading
Contents
RICS Information Papers 1 2 3 4 5 6 7 8 9 10 11 11 Introduction What is DRC? When is DRC used? Valuer qualifications Settling the terms of engagement Assessing replacement cost The site value of a specialised property Calculating the cost of the buildings and site improvements of a specialised property Assessing depreciation Other considerations Final reconciliation Reporting Appendix A – Checklist Appendix B – PS 5.4, 5.5 and 5.6 iv 1 2 3 5 6 7 8 10 13 18 19 20 21 23
EFFECTIVE FROM 1 JULY 2007
VALUATION INFORMATION PAPER NO. 10
| iii
RICS Information Papers
This is a Valuation