Applicability test: asset-based valuation methods for port concessions
| Applicability test | Asset-based approach valuation methods | ||
|---|---|---|---|
| Book value valuation | Net realisable valuation (NRV) | Replacement value valuation | |
| Applicable to concession valuation? | Low | Moderate | Moderate |
| Rationale | • Book value is based on historic sunk cost and does not take into account market prices • Values are adjusted with accounting depreciation which may not be aligned to market values • Book value does not consider the cash-generating potential of the asset • The approach does not consider the cost of goodwill | • NRV of the assets may be low due to port assets being specialised in nature • NRV does not consider the cash-generating potential of the asset • NRV does not consider the cost of goodwill | • Replacement value does not consider the cost of goodwill • Replacement value does not consider the cash generating potential of the asset |
| Applicability test | Asset-based approach valuation methods | ||
|---|---|---|---|
| Book value valuation | Net realisable valuation (NRV) | Replacement value valuation | |
| Applicable to concession valuation? | Low | Moderate | Moderate |
| Rationale | • Book value is based on historic sunk cost and does not take into account market prices | • NRV of the assets may be low due to port assets being specialised in nature | • Replacement value does not consider the cost of goodwill |
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