Guidelines for determining depreciation value of assets by comparison technique effective from July 1, 2024 in Vietnam

Guidelines for determining depreciation value of assets by comparison technique effective from July 1, 2024 in Vietnam

Pursuant to Article 10 of the Vietnamese Valuation Standards on the cost approach issued with Circular 32/2024/TT-BTC, the guidance on determining the depreciation value is as follows:

- Gather information and select at least 02 similar assets that have been successfully traded or offered for purchase or sale in the market within no more than 01 year from the valuation time;

- Based on the assessment of several basic comparative factors (e.g., sales conditions, financial terms), adjust the transaction prices of similar assets to obtain indicative prices of similar assets reflecting the characteristics of the assets being appraised. For real estate cases, the value of land use rights or land tax rights (if any) of similar assets should be excluded to reflect the market value of the assets on the land;

- Determine the cost to create a new similar asset at the time of the transactions of the similar assets (or the asset on the land in the case of real estate), without depreciation or obsolescence but including the profit of the manufacturer/investor;

- Subtract the result at point c from the result at point b to determine the depreciation value of the similar assets. Then, determine the depreciation rate of the comparison assets by taking the depreciation value divided by the cost of creating a new comparison asset. Based on this, determine the depreciation rate of the appraised asset;

- Determine the replacement cost or reproduction cost, then multiply by the depreciation rate determined at point d to determine the total depreciation value of the appraised asset corresponding to the replacement cost method or reproduction cost method.

See more Circular 32/2024/TT-BTC, which takes effect from July 1, 2024.

Circular 126/2015/TT-BTC promulgating Vietnamese valuation standards No. 08, 09, and 10 will be invalidated from the effective date of Circular 32/2024/TT-BTC.

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