|
MINISTRY OF FINANCE
-------
|
SOCIALIST REPUBLIC
OF VIETNAM
Independence - Freedom – Happiness
---------------
|
|
No. 32/2024/TT-BTC
|
Hanoi, May 16, 2024
|
CIRCULAR
ON THE ISSUANCE OF
VIETNAM VALUATION STANDARDS FOR THE MARKET APPROACH, COST APPROACH, AND INCOME
APPROACH
Pursuant
to the Law on Prices dated June 19, 2023;
Pursuant
to Decree No. 14/2023/ND-CP dated April 20, 2023 of the Government on the
functions, tasks, powers, and organizational structure of the Ministry of
Finance;
At
the request of the Director of the Price Management Department;
The
Minister of Finance issues this Circular on Vietnam Valuation Standards for the
market approach, cost approach, and income approach.
Article 1. Issue
together with this Circular the following Vietnam Valuation Standards:
-
Vietnam Valuation Standard on the Market Approach;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
-
Vietnam Valuation Standard on the Income Approach.
Article 2. Entry in force
1.
This Circular comes into force as of July 1, 2024.
2.
Circular No. 126/2015/TT-BTC dated August 20, 2015 of the Minister of Finance
on issuance of Vietnam Valuation Standards No. 08, 09, and 10 shall cease to be
effective from the effective date of this Circular.
Article 3. Implementation
1.
Relevant organizations and individuals shall implement the Vietnam Valuation
Standards issued under this Circular.
2.
Difficulties that arise during the implementation of this Circular should be
reported to the Ministry of Finance for consideration./.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
PP. THE MINISTER
DEPUTY MINISTER
Le Tan Can
VIETNAM
VALUATION STANDARDS
ON THE MARKET
APPROACH
(Enclosed with Circular No. 32/2024/TT-BTC dated May 16, 2024 of the
Minister of Finance)
Chapter I
GENERAL PROVISIONS
Article 1. Scope
This
Vietnam Valuation Standard stipulates and guides the market approach for
valuation in accordance with price regulations.
Article 2. Regulated entities
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
2.
Organizations and individuals conducting State valuations (hereinafter referred
to as state-authorized valuation entities) in accordance with pricing laws.
3.
Organizations and individuals requesting valuations (hereinafter referred to as
valuation clients), and third parties using valuation reports based on
valuation contracts (if applicable).
Article 3. Interpretation of terms
For
the purposes of this Vietnam Valuation Standard, the following terms are
defined as follows:
1.
“Comparable asset” refers to an identical or similar asset to the asset being
valued (hereinafter referred to as valued asset.
2.
“Similar asset” refers to an asset of the same type and comparable to the
valued asset in terms of intended use, functionality, legal characteristics,
economic-technical features, key characteristics of the valued asset, and other
factors (if applicable).
3.
“Indicated price” refers to the price of the comparable asset after
adjustments have been made for differences in comparison factors with the
valued asset.
4.
“Net total adjustment value” is the total adjustment based on comparison
factors, accounting for both negative (downward adjustments) and positive
(upward adjustments), without considering the absolute value of each
adjustment.
5.
“Gross total adjustment value” is the total adjustment based on comparison
factors in absolute value.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
1.
The market approach determines the value of a valued asset by comparing it to
comparable assets that have known market prices. In the case of business
valuations, additional information about the valued asset itself may also be
used.
2.
Depending on the type of asset, the market approach can be applied through
various methods, including the comparison method, average ratio method, and sales
comparison method.
The
average ratio method and sales comparison method are only applicable to
business valuations and are regulated under the Vietnam Valuation Standards for
business valuation.
Chapter II
COMPARISON METHOD
Article 5. Applying the comparison method
1.
The comparison method determines the value of the valued asset by examining,
analyzing, and evaluating the comparable factors of similar assets and then
adjusting the price of the comparable assets to serve as the basis for
estimating the value of the valued asset.
2.
The comparison method is applied to value assets that have been transferred,
offered for purchase, or publicly listed for sale in the market. An asset is
considered to have been transferred, offered for purchase, or publicly listed
for sale if at least three comparable assets can be obtained from different
organizations or individuals who have transferred, offered for purchase, or
publicly listed them on the market near the time and location of the valuation.
3.
Steps to implement:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
b)
Analyze the information;
c)
Adjust for differences between the valued asset and the comparable assets;
d)
Determine the indicated price of the comparable assets;
dd)
Determine the value of the valued asset.
Article 6. Surveying and collecting information
on comparable assets
1.
Information on comparable assets includes legal, economic, and technical
characteristics; the price of the comparable assets; the time, location, and
parties involved in the transfer, purchase, or sale; conditions attached to the
price, and other relevant information (if any).
2.
The survey and collection of information on comparable assets must meet the
following requirements:
a)
Information collected on comparable assets must be objective and reflect actual
conditions. It must be reviewed and assessed to ensure it can be used for
analysis and calculation. Priority is given to information that is closest in
time and location to the valuation of the valued asset;
b)
A minimum of three comparable assets must be collected, with transfer,
purchase, or sale dates occurring at or near the time of valuation, but no more
than 24 months prior to the valuation date.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
If
information is collected from offered purchase or sale prices, market price
trends, information sources, and other price data must be evaluated and
analyzed to make appropriate adjustments (if necessary) before using them as
comparison prices;
c)
Preference is given to selecting comparable assets that are closest in
proximity to the valued asset. Selection is not limited by administrative
boundaries of communes or districts within a province. If the information
collection extends beyond the province, the valuer must state the reasons and
limitations (if any) for this in the valuation report;
d)
Information on comparable assets may be collected from one or more of the
following sources: contracts, invoices, sales receipts; successful transaction
results on exchanges; means of mass media; market survey forms; prices recorded
in documents from regulatory agencies or businesses; auction or bidding results
as per regulations; direct interviews; phone calls; emails or the internet;
government price databases, organizations, businesses; and other sources as per
regulations (if any).
3.
The results of the survey and information collection on comparable assets must
be recorded and stored in the form of data collection sheets with the signature
of the information collector.
If
additional survey forms, questionnaires, data collection sheets, or evaluation
forms are used during the information collection process, the information
collector must sign these forms.
If
information is collected from the internet, the data collection sheet must
clearly cite specific links to the information, and images must be stored as
evidence. Information collected from the internet must come from official
websites of organizations operating under legal regulations.
If
the information is collected from purchase or sale quotes, it must include the
name, address, tax identification number (if any) and the official stamp of the
quoting entity, the time the information was provided, and the validity of the
quote.
Article 7. Information analysis
1.
Information analysis is conducted to identify similarities and differences,
advantages and disadvantages, based on comparison factors between the valued
asset and the comparable assets.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
3.
The analysis of comparison factors between the valued asset and comparable
assets is carried out using the following methods:
a)
Quantitative analysis: This includes pairwise comparison, statistical analysis,
regression analysis, cost analysis, and other similar methods to determine the
adjustment value in terms of money or percentage (%);
b)
Qualitative analysis: This includes comparative correlation analysis, ranking
analysis, and interviews with relevant parties.
Article 8. Adjusting differences between the
valued asset and comparable assets
1.
When adjusting for differences between the valued asset and comparable assets,
quantitative comparison factors (those that can be converted into monetary
values) should be adjusted first, followed by qualitative comparison factors
(those that cannot be converted into monetary values).
2.
The adjustments for differences between the valued asset and comparable assets
include:
a)
Object of adjustment: This refers to the prices of comparable assets that have
been transferred, offered for purchase, or offered for sale in the market, with
reasonable adjustments made to reflect the prevailing transaction prices in the
market for comparable assets;
b)
Basis for adjustment: Adjustments are made based on the differences in
comparison factors between the comparable asset and the valued asset;
c)
Principles of adjustment:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
When
adjusting the price for differences in one comparison factor, all other
comparison factors are held constant (assumed to be the same). If the valued
asset has inferior qualities compared to the comparable asset, the price of the
comparable asset is adjusted downward (-). If the valued asset has superior
qualities compared to the comparable asset, the price of the comparable asset
is adjusted upward (+). If the valued asset and the comparable asset are
identical in a given comparison factor, no adjustment is made.
Each
adjustment for comparison factors must be supported by evidence gathered from
the market, such as data collection forms, information analysis reports, market
research reports, or other relevant documents;
d)
Methods of adjustment:
Absolute
monetary adjustment: This method is used when the difference in comparison
factors can be expressed as an exact monetary value, calculated through
specific computations.
Percentage
adjustment: This method is used when the difference in comparison factors can
only be estimated as a relative adjustment in percentage terms;
dd)
Adjustment value:
The
adjustment value for differences in comparison factors must be estimated based
on market transaction data, with a thorough analysis and assessment of how each
comparison factor affects the value of the asset;
e)
Order of adjustments:
Adjustments
are first made for the group of comparison factors related to legal
characteristics and transaction conditions, followed by adjustments for the
group of economic and technical characteristics. The price after adjustments
for legal and transaction factors is then used to adjust for the economic and
technical characteristics of the asset.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
g)
Control principle:
Ensure
that the difference between the price of the comparable asset and its indicated
price, as regulated in Article 9 of this Standard, aligns with market evidence.
Ensure
that the difference between each indicated price and the average of the
indicated prices does not exceed 15%.
Article 9. Determining the indicative value
of comparable assets
1.
The indicative value of comparable assets serves as the basis for estimating
the value of the valued asset.
2.
The adjustment for comparison factors and the determination of the indicative
value of comparable assets are shown in the following adjustment table:
No.
Comparison factor
Unit
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Comparable asset 1
Comparable asset 2
Comparable asset 3
Comparable asset …
A
Market
price (before adjustment)
Known
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Known
Known
B
Price
after adjustment
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
C
Adjustment
for comparison factors
C1
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
rate
%
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
amount
VND
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Price
after adjustment 1
VND
C2
Comparison
factor 2
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
rate
%
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
amount
VND
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
VND
C3
Comparison
factor 3
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
rate
%
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
amount
VND
Price
after adjustment 3
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
C4
Comparison
factor 4
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
rate
%
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Adjustment
amount
VND
Price
after adjustment 4
VND
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
D
Indicative
value
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
D1
Average
indicative value
VND
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
D2
Deviation
from the average indicative value
%
E
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
E1
Total
gross adjustment value
VND
E2
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
times
E3
Adjustment
margin
%
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
E4
Total
net adjustment value
VND
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 10. Determining the value of the
valued asset
1.
The value of the valued asset is determined based on the indicated prices of
comparable assets, along with an analysis of the quality of the information
from the comparable assets (regarding the source, reliability, and relevance of
the information) and the following criteria:
a)
The smallest total gross adjustment value (i.e., the smallest absolute sum of
all adjustments);
b)
The fewest number of adjustments;
c)
The smallest adjustment range (i.e., the smallest adjustment amount or
percentage for a comparison factor);
d)
The smallest total net adjustment value (i.e., the smallest sum of all net
adjustments).
2.
If necessary, the trends and fluctuations of market supply and demand should be
assessed before finalizing the valued asset's value using the comparison
method./.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
VIETNAM VALUATION STANDARDS
ON THE COST APPROACH
(Enclosed with Circular No. 32/2024/TT-BTC dated May 16, 2024 of the Minister
of Finance)
Chapter I
GENERAL
PROVISIONS
Article 1. Scope
This
Vietnam Valuation Standard stipulates the cost approach for valuation in
accordance with price regulations.
Article 2. Regulated entities
1.
Valuers and valuation firms providing valuation services as per legal
regulations on pricing.
2.
Organizations and individuals conducting State valuations (hereinafter referred
to as state-authorized valuation entities) in accordance with pricing laws.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 3. Interpretation of terms
For
the purposes of this Vietnam Valuation Standard, the following terms are
defined as follows:
1.
“Cost approach” refers to the method of determining the value of an asset
being valued (hereinafter referred to as valued asset) by estimating the cost
of producing an identical or similar asset and accounting for depreciation of
the valued asset.
2.
“Physical depreciation” refers to the loss in an asset's utility, leading
to a decrease in its value due to physical damage to the asset or its
components, caused by the effects of time and normal use.
3.
“Functional depreciation” refers to the loss in utility when an asset is
less efficient than a substitute asset, leading to a decrease in value.
4.
“External depreciation” refers to the loss in value caused by external
factors such as economic conditions or location. External depreciation
due to location applies only to real estate and/or intangible assets related to
real estate and occurs when changes in infrastructure, surroundings, or natural
environments reduce the asset's value.
5.
“Substitute asset” refers to an asset with similar functionality and
utility to the valued asset, designed or built using newer technology,
materials, or techniques.
6.
“Total depreciation value” refers to the sum of the asset's physical,
functional, and external depreciation at the time of valuation.
7.
“Curable depreciation” can be addressed if:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
b)
The cost of repair is greater than the added value, but the repair is necessary
to maintain the value of other parts of the valued asset.
8.
“Economic life” refers to the time period during which an asset generates
economic benefits, starting from when it was newly produced or constructed and
put into use.
9.
“Actual life” refers to the number of years since the asset was completed
and put into use, up to the valuation date.
10.
“Effective life” refers to the number of years that reflects the actual
condition of the valued asset at the time of valuation. The effective life
depends on the maintenance and upkeep of the asset.
11.
“Physical life” refers to the number of years the asset can be used before
it becomes physically unusable for its originally intended purpose due to
physical damage or wear and tear, without accounting for functional obsolescence
or the impact of external factors. This can be determined through the
manufacturer's technical specifications and the asset's construction features.
12.
“Replacement cost” refers to the cost to create or acquire a 100% new
substitute asset at the time of valuation.
13.
“Reproduction cost” refers to the cost to produce or acquire an identical
asset to the valued asset, as it was when newly created at the time of
valuation.
Chapter II
SPECIFIC
PROVISIONS
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
The
cost approach is typically applied in the following cases:
1.
There is insufficient market information to apply the market approach or income
approach.
2.
When estimating the cost of constructing a new asset or appraising newly built
or manufactured assets.
3.
To compare and verify with other valuation approaches.
Article 5. Replacement cost method
1.
The replacement cost method determines the value of the valued asset based on
the difference between the replacement cost and the asset's depreciation value.
2.
The formula for the replacement cost method is:
Estimated value of
the valued asset
=
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
-
Total depreciation
value of the valued asset (excluding any functional depreciation already
reflected in the replacement cost)
Article 6. Reproduction cost method
1.
The reproduction cost method determines the value of the valued asset based on
the difference between the reproduction cost and the asset's depreciation
value.
2.
The formula for the reproduction cost method is:
Estimated value of
the valued asset
=
Reproduction cost
(including the manufacturer's/investor's profit)
-
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 7. Summation method
1.
The summation method (also known as the asset method) determines the value of
the valued asset by adding up the individual values of its components.
2.
This method is typically used to appraise assets such as enterprises or assets
whose value primarily depends on the value of their individual components.
3.
The formula for the summation method is
Estimated value of
the valued asset
=
Where:
Vi:
is the value of component i of the valued asset, determined by the valuation
approaches and methods outlined in the Vietnam Valuation Standards;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
i:
i-th component.
Article 8. Components of reproduction and
replacement costs and important considerations
1.
Some components of reproduction cost and replacement cost that need to be
considered and analyzed during the valuation process include: material costs,
equipment costs, research and testing expenses, labor costs, transportation,
design, consulting, management, financial expenses during production,
non-refundable taxes, installation, trial operation, contractor profit,
manufacturer/investor profit, taxes and charges payable, and other costs as
required by law.
2.
The determination of reproduction and replacement costs must align with the
valuation base and assumptions made during the valuation engagement.
3.
When determining reproduction costs, if identical materials or equipment cannot
be sourced, similar materials or equipment may be considered.
4.
When determining replacement costs, the substitute asset must be identified
based on its functions and uses, and the cost to create or acquire the
substitute asset must be estimated accordingly.
5.
Reproduction and replacement costs should be based on market information
collected at the time of valuation unless otherwise specified by law, such as when
regulatory agencies provide cost norms, unit prices, investment rate per unit.
Article 9. Manufacturer/Investor profit
1.
The manufacturer/investor's profit in reproduction or replacement costs is
determined as follows:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
b)
The profit of the manufacturer/investor in the reproduction cost or replacement
cost is calculated by multiplying (x) the average ratio determined in point a
of this clause by the reproduction cost or replacement cost, excluding the
profit of the manufacturer/investor.
2.
In cases where the method specified in clause 1 of this Article cannot be
applied, use the standard set by the competent state authority (if available).
Article 10. Depreciation value determined
using the comparison technique
1.
The comparison technique determines the depreciation value of an asset by
comparing it with the depreciation values of similar assets that have been
transacted in the market.
2.
The depreciation value is determined as follows:
a)
Collect information and select at least two similar assets that have been
successfully transacted or offered for purchase or sale in the market within
the past year from the valuation date;
b)
Based on the assessment of key comparison factors (e.g., sales conditions,
financial terms), adjust the transaction price of the similar assets to derive
the indicated prices that reflect the characteristics of the valued asset. In
the case of real estate, the value of land use right or land lease right (if
applicable) of similar assets must be excluded to reflect the market value of
the asset on the land;
c)
Determine the cost to create a new, similar asset at the transaction time of the
comparable assets (or the asset on the land in the case of real estate),
without depreciation or obsolescence, but including the
manufacturer's/investor's profit;
d)
Subtract the result from b) from the result from c) to determine the
depreciation value of the comparable assets. Then, calculate the depreciation
rate by dividing the depreciation value by the cost to create the new
comparable asset. Based on this, determine the depreciation rate of the valued
asset;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 11. Depreciation value determined
using the effective life technique
The
depreciation rate of an asset using the effective life technique is determined
as follows:
1.
Calculate the depreciation rate of the valued asset:
Depreciation rate
=
Effective life
x 100%
Economic life
2.
Determine the replacement or reproduction cost, then multiply by the
depreciation rate calculated in section 1 to determine the total depreciation
value of the valued asset using the replacement or reproduction cost method.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
1.
The total depreciation value of an asset is determined by analyzing its
physical, functional, and external depreciation and adding these depreciation
values together.
2.
The physical depreciation value is determined using one of the following methods:
a)
For curable physical depreciation, the physical depreciation value is estimated
by the cost to repair or rectify wear and obsolescence (this cost includes the
total expenses such as purchasing new parts and removing old ones) after
deducting any income from the sale of old, removed parts (if applicable);
b)
Determine the physical depreciation rate based on an analysis of the asset's
utility at the time of valuation to estimate the physical depreciation value. In
specific:
Physical
depreciation rate
=
Utilization level
x 100%
Designed
utilization level
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
c)
Determine the physical depreciation rate based on the ratio of the asset’s
effective life to its physical life.
Formula:
Physical
depreciation rate
=
Effective life
x 100%
Physical life
Determine
the replacement or reproduction cost, then multiply by the calculated physical
depreciation rate to determine the physical depreciation value using the
replacement or reproduction cost method;
d)
Determine the physical depreciation rate based on an evaluation of the wear of
the asset’s key components.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Where:
H:
Physical depreciation rate of the valued asset as a percentage;
Hi:
Physical depreciation rate of the i-th key component as a percentage;
Ti:
Proportion of the i-th key component in the total asset value;
n:
Total number of key components of the valued asset;
i:
The i-th key component.
Determine
the replacement or reproduction cost, then multiply by the calculated physical
depreciation rate to determine the physical depreciation value using the
replacement or reproduction cost method.
2.
Determining functional depreciation value:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
b)
For curable functional depreciation, the functional depreciation value is
calculated as the total cost of rectification after deducting any income (if
applicable) from the sale of removed or replaced parts (if applicable);
c)
Functional depreciation due to high capital costs arises when changes in
design, production materials, or new technology result in a substitute asset
with similar functionality but lower investment costs than the valued asset. This
type of depreciation, which cannot be rectified, is determined by the
difference between the reproduction cost and the replacement cost if the
reproduction cost is higher than the replacement cost for the same asset;
d)
Functional depreciation due to high operating costs occurs when changes in design,
technology, or superior productivity result in substitute assets with lower
operating and production costs than the valued asset. The value of this
depreciation, which cannot be rectified, is determined as follows:
Analyze
the operational reports of the valued asset to determine the operating cost per
unit of product produced by the valued asset;
Determine
the operating cost per unit of product produced by the substitute asset. Then,
calculate the difference in operating costs per unit of product between the
valued asset and the substitute asset;
Estimate
the remaining economic life of the asset from the valuation date;
Determine
the total annual operating cost difference based on the annual product output
of the valued asset and the operating cost difference throughout the asset’s
remaining economic life;
Deduct
the total annual operating cost difference based on the corporate income tax
effect on the additional income (due to using the substitute asset with lower
operating costs than the valued asset);
Discount
the total annual operating cost difference (throughout the remaining economic
life) to the valuation date using a discount rate that reflects the risk
associated with using the valued asset;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
3.
Determining external depreciation value
External
depreciation includes both economic depreciation and value reduction due to
location. This type of depreciation is usually irreparable.
External
depreciation value is determined through market analysis, direct capitalization
of lost income due to external depreciation, or by subtracting physical and
functional depreciation values from the total depreciation value of the asset.
External
depreciation value is typically determined after the physical and functional
depreciation values have been established, as external depreciation is caused
by outside factors, independent of the valued asset itself.
a)
Estimating external depreciation through market analysis:
Use
market information analysis to assess the value of the valued asset by
examining the transaction information of similar assets that have been
successfully sold in the market;
b)
Estimating external depreciation by directly capitalizing lost income:
When
the asset generates income, the lost income due to external economic or
location factors can be capitalized to determine the total lost income in the
asset’s overall value. This lost income corresponds to the external
depreciation value.
The
estimation of total lost income is carried out as follows: Analyze market data
(related to economic and location factors) to estimate the annual lost income;
discount the annual lost income to determine the total lost value's effect on
the asset's value. If the lost income is stable and regular, the lost income
stream is capitalized using an appropriate capitalization rate. If the lost
income fluctuates annually, the lost income stream is discounted using the
discounted cash flow (DCF) method. The capitalization rate and DCF analysis
are conducted in accordance with the Vietnam Valuation Standards on the Income
Approach./.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
VIETNAM VALUATION STANDARDS
ON
THE INCOME APPROACH
(Enclosed with Circular No. 32/2024/TT-BTC dated May 16, 2024 of the
Minister of Finance)
Chapter I
GENERAL
PROVISIONS
Article 1. Scope
This
Vietnam Valuation Standard stipulates and guides the income approach for
valuation in accordance with price regulations.
Article 2. Regulated entities
1.
Valuers and valuation firms providing valuation services as per legal
regulations on pricing.
2.
Organizations and individuals conducting State valuations (hereinafter referred
to as state-authorized valuation entities) in accordance with pricing laws.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 3. Interpretation of terms
For
the purposes of this Vietnam Valuation Standard, the following terms are
defined as follows:
1.
“Income approach” refers to the method of determining the value of an asset
by converting future cash flows generated by the asset into present value.
2.
“Direct capitalization method” refers to a valuation method that determines
the value of an asset by converting projected stable annual net income into
present value using an appropriate capitalization rate.
3.
“Discounted cash flow (DCF) method” refers to a valuation method that determines
the value of an asset by converting projected future cash flows into present
value using an appropriate discount rate.
4.
“Capitalization rate” refers to the rate used to convert projected stable
annual net income into present value.
5.
“Discount rate” refers to the rate used to convert future cash flows into
present value.
6.
“Terminal value” refers to the projected value of an asset at the end of
the DCF forecast period (at the end of the cash flow analysis period).
Article 4. Income approach and valuation
methods used in the income approach
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
2.
The valuation methods used in the income approach include the direct
capitalization method and the DCF method, applied to assets that meet the
criteria outlined in section 1 of this article, except in the following cases:
a)
For businesses, the valuation methods used in the income approach include the
free cash flow to firm (FCFF) method, the dividend discount method, and the
free cash flow to equity (FCFE) method, as regulated in the Vietnam Valuation
Standards on Business Valuation;
b)
For intangible assets, the valuation methods used in the income approach
include the royalty relief method, the excess earnings method, and the
incremental income method, as regulated in the Vietnam Valuation Standards on
Intangible Asset Valuation.
Chapter II
DIRECT
CAPITALIZATION METHOD
Article 5. Applying the direct capitalization
method
1.
The formula for the direct capitalization method is:
Where:
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
I:
Net income generated by the asset
R:
Capitalization rate
2.
Steps to implement:
a)
Determine the net income generated by the asset;
b)
Determine the capitalization rate;
c)
Calculate the asset value using the direct capitalization formula.
Article 6. Determining the net income
generated by the asset (I)
1.
The formula for determining net income:
Net income
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Potential gross
income
-
Loss of revenue due
to underutilization of capacity and payment risk
-
Operating expenses
2.
The potential gross income, vacancy loss, and operating expenses are determined
based on market survey data from at least three comparable assets, referencing
past income and operating expenses of the valued asset, as well as
supply-demand conditions, industry growth prospects, and other factors
influencing the forecast of potential gross income, vacancy loss, and projected
operating expenses of the valued asset.
3.
Potential gross income is the total stable annual income generated by fully
utilizing the asset.
4.
Loss of revenue due to underutilization of capacity and payment risk are
calculated by multiplying the loss rate by the potential gross income, where
the loss rate is estimated by collecting and analyzing market information of
comparable assets.
5.
Operating expenses refer to the annual costs necessary to maintain the income
stream from the asset.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 7. Determining the capitalization
rate (R)
1.
Based on the purpose of the valuation, the characteristics of the valued asset,
the valuation basis, and the collected information, the capitalization rate is
determined using one of two methods: the comparison method and the
loan-to-equity analysis method.
2.
Comparison method
a)
The comparison method determines the capitalization rate for the valued asset
by comparing it with the capitalization rates of similar assets in the market;
b)
To determine the capitalization rate, at least three comparable assets in the
market must be surveyed, collecting information such as transaction prices,
intended use, financial terms, market conditions at the time of sale,
buyer-seller characteristics, operating income, operating expenses, vacancy and
collection loss rates, and related factors. If the comparable assets have
differences from the valued asset, these differences must be adjusted;
c)
The calculation of net income and operating expenses for the comparable assets
must be consistent with the calculations used for the valued asset. The
transaction prices of the comparable assets must reflect current market
conditions as well as expected future market conditions similar to the valued
asset.
3.
Loan-to-equity analysis method
a)
The loan-to-equity analysis method determines the capitalization rate based on
the weighted average of the loan capitalization rate and the equity
capitalization rate, where the weights are the proportions of capital raised
from different sources invested in the asset. This method is applied to assets
funded by a combination of equity and loans;
b)
To determine the capitalization rate, information related to equity and loan
sources must be collected, including: the equity-to-loan ratio, loan terms,
number of payments, interest rates, investor expectations, return on
investment, and other relevant factors;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
d)
The equity capitalization rate is the rate used to capitalize income from
equity. It is calculated by dividing annual equity income by the total equity
amount. The equity capitalization rate is typically determined by market
surveys and analysis of comparable assets.
Chapter III
DISCOUNTED CASH FLOW METHOD
Article 8. Applying the Discounted cash flow
method
1.
The general formula for the discounted cash flow method:
a)
General formula:
b)
Specific formulas for certain cases:
-
For single-stage cash flow where annual cash flows are equal and constant A, t
→ n
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
-
For two-stage cash flows:
*When
cash flows vary until year n, and from year n+1 onwards are stable, with t → ∞:
* When cash flows vary until year n, and from
year n+1 onwards grow at a constant rate of g% per year (where g < r) and t
→ ∞:
Where:
V:
Value of the valued asset
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Vn: Terminal value at
the end of the forecast period
n:
Forecast period for future cash flows
r:
Discount rate
t:
Forecast year
g:
Cash flow growth rate
2.
Steps to implement:
a)
Identify the forecast period for future cash flows;
b)
Estimate forecasted cash flows based on the projected income from the asset and
estimated operating costs;
c)
Determine the terminal value of the asset at the end of the forecast period;
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
dd)
Calculate the asset’s value using the discounted cash flow formula.
Article 9. Identifying the forecast period
for future cash flows (n)
1.
The forecast period for future cash flows must be based on the purpose of the
valuation, the characteristics of the valued asset, the collected information,
and the valuation basis. The cash flow may consist of one or more stages.
2.
The forecast period is determined based on the following factors:
a)
The economic life of the valued asset;
b)
The intended holding period for the valued asset;
c)
The reliability of the information collected during the forecast period;
d)
The forecast period must be long enough for the valued asset to reach
relatively stable income levels and to allow for the calculation of terminal
value.
Article 10. Identifying cash flows (CF)
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
a)
Income from the asset consists of the money the investor receives from
investing in the asset;
b)
Income estimation is based on: the economic and technical characteristics of
the valued asset; past income from the valued asset and/or income from similar
assets; industry market conditions; and other factors influencing the forecast
of total income;
c)
Income from the asset may be net operating income or potential gross income,
depending on the available data and information.
2.
Estimating operating costs related to the asset’s operation:
a)
Operating costs include the necessary expenses to maintain income from the
operation of the asset (including interest expenses);
b)
Cost estimates are based on the economic and technical characteristics of the
valued asset; past costs of the valued asset and/or similar assets; industry
market conditions; and other factors influencing the forecast of costs.
3.
Cash flow (CF) is determined as the difference between income from the asset
and operating costs. Cash flow (CF) may be calculated either before or after
income tax, depending on the valuation purpose, the characteristics of the
valued asset, the collected information, the valuation basis, and the specific
asset valuation method, and must align with the method used to determine the
discount rate.
Article 11. Determining the terminal value of
the asset (Vn)
1.
The terminal value of the asset at the end of the forecast period can be the
liquidation or salvage value, or the market value of similar assets at the end
of the forecast period.
...
...
...
Hãy đăng nhập hoặc đăng ký Thành viên
Pro tại đây để xem toàn bộ văn bản tiếng Anh.
Article 12. Determining the discount rate ®
1.
The discount rate must reflect the time value of money, the risks associated
with the cash flows generated by the valued asset, and the future use of the
valued asset.
2.
The discount rate may vary from year to year during the forecast period. The
determination of the discount rate must be justified, based on the valuation
basis, the valuation purpose, the type of valued asset, the asset’s economic
life or holding period, geographic differences, exchange rates (if applicable),
and the type of cash flow being considered.
3.
The discount rate is determined based on market data and using one of the
following methods: the average return rate of similar assets in the market;
the weighted average cost of capital (WACC); or the capital asset pricing model
(CAPM)./.
Đã cập nhật Luật Đất đai 2024 mới nhất