A valuation technique that reflects the amount that would be currently required to replace the service capacity of an asset is known as:
A)the fair value approach.
B)the income approach.
C)the cost approach.
D)the market approach.

Question

Quizplus · Accepted Answer

The valuation technique that reflects the amount required to replace the service capacity of an asset is the cost approach. This approach estimates the cost of replacing the property with a similar one in today's market, adjusted for depreciation. The fair value approach is based on market values or quotes, the income approach is based on the anticipated earnings of an asset or property, and the market approach compares the asset to similar assets that have recently sold in the market. However, neither of these approaches specifically reflect the cost required to replace the service capacity of an asset.

A Valuation Technique That Reflects the Amount That Would Be