SAEE - International Valuation Standards Questions and Answers Flashcards
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According to IVS, which of the following is required in a valuation report to ensure compliance?
Answer: The identity of the valuer, purpose of the valuation, basis of value, valuation date, and scope of work
IVS mandates that valuation reports include specific elements such as the valuer's identity, valuation purpose, basis, date, and scope to ensure transparency and usability.
Under the IVS income approach, what is the discount rate intended to reflect?
Answer: The risk associated with the expected future cash flows of the asset being valued
The discount rate under the IVS income approach reflects the risk and time value of money associated with the specific asset's projected cash flows.
What role does the 'valuation date' serve under IVS?
Answer: It establishes the specific point in time at which the valuation opinion applies
The valuation date under IVS fixes the point in time to which the value opinion relates, ensuring that market conditions on that date are reflected.
Which IVS concept requires that a valuer consider whether the current use of an asset differs from its highest and best use?
Answer: Premise of value
The premise of value in IVS requires valuers to consider whether the asset is being valued based on its current use or an alternative highest and best use.
According to IVS, when applying the sales comparison approach, what adjustment is most critical to ensure reliability?
Answer: Adjusting for differences in location, size, condition, and transaction terms between the subject and comparable properties
IVS requires that differences in key characteristics such as location, size, condition, and terms be systematically adjusted to derive a reliable indication of value.
Under IVS, what is the significance of 'equitable value' as a basis of value?
Answer: It represents the price that is fair between two identified parties considering the advantages and disadvantages each party gains from the transaction
Equitable value under IVS estimates a fair price between two specific parties, accounting for the respective benefits each would gain.