Here our aim is to determine, in an event of loss, how much will be required to replace an asset based on the prevailing market situation. In other words, the determination of the Equivalent Cost of Reinstatement becomes our objective. The insurance value of the asset thus provides a basis upon which assets can be provided with appropriate insurance cover against all unforeseen occurrences. An adequate cover for an asset is imperative because, if the asset in question is underinsured, under stringent conditions of cash liquidity, it may be difficult to bring it back into operation, except if it is possible to infuse capital from an external source.
Here the valuation is channeled towards establishing the reserve price below which an auctioneer should not conclude a sale in an auction. The valuation in this case is required in order to ensure that the property is not disposed at a ridiculous price. A number of the assets mortgaged to banks may have to be valued for the purpose of establishment an auction reserve price.
The Nigerian Ports Authoritymay wish to know whether a non - performing loan of a mortgagee has taxation issues, and may need to know the mortgagee’s tax liability. In such cases we determine the tax (which could be Capital Gains Tax, Capital Transfer Tax, Probate or Rates) payable to or chargeable by a Statutory Body taking into consideration the prevailing laws at the time.
Here the valuation presupposes that the property (for instance, a factory) being valued, is to be sold to an investor who wishes to continue making use of the property as it presently is being used and therefore an appropriate value has to be attributed to the goodwill the property presently enjoys.
A valuation may be necessitated by the need of an investor to know how much to invest on a property not being put to its highest and best use, in which case value has to be attributed to the Latent Value of the property, the cost of a proposed redevelopment estimated, and the open market value of the property estimated.