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#Current cost basis of measurement code

The recognised surveying standard for retail property and offices is Net Internal Area (NIA).

#Current cost basis of measurement code

This complies with the code approved by the Royal Institution of Chartered Surveyors (RICS). The way we measure property is contained in the VOA measuring guide.

give us accurate information when asked about your occupation and the rent you payĪ standard approach to measurement is used for different types of property.

provide a copy of the property plan if you have one.

give open access to all parts of the property.

On inspection the referencer or caseworker will gather all of the information they need to value the property. They will also make notes and take photographs. They will use a laser tape or other measuring devices to measure the property. They will have identification with them which you can ask to see. Normally only 1 person from the VOA, known as a referencer, will call at your property to inspect. What to expect when we visit the property We may on occasion call at your property without arranging an inspection if we are already in the area. We will arrange the inspection by phone, letter or email depending on the contact details we have for you.

So the basis of determining the current cost must be the new asset expected to replace the old one.The Valuation Office Agency (VOA) may need to inspect your property to make sure the information we hold is accurate. There are some non-current assets that don’t have a second-hand market because it was specifically built or made for that business only. A non-current asset isn’t more valuable to a business just because its current cost has increased.Īnother problem is the subjectivity of determining the amount of the increase in cost. This is irrelevant as changes in market price don’t mean anything until the assets are sold. The supporters of Historical Cost Accounting criticize Current Cost Accounting because it violates the traditional revenue recognition principle by recognizing increases in the value of the assets, both current and non-current, before they are sold. As a result, when replacement-cost depreciation is substituted for historical-cost depreciation, the cost of doing business includes the high capital cost of the advanced technology as well as the high operating costs of the older technology in use, which creates measurement errors. Replacement-cost valuations of plant and equipment often include the cost of technological advances and often these advances would reduce operating costs below the level reported by historical cost. Measurement errors may have reduced the usefulness of current-cost and replacement-cost data. Under physical capital concept, holding gains and losses are not included in the profit and are supported by the theory of optimal resource usage that uses current costs as a measure of input opportunity cost. There is one group who believe in the financial capital concept in which the holding gains is included in the profit and the other group is those who believe in the physical capital concept. Supporters of Current Cost Accounting are convinced that it provides more useful information than conventional accounting but still they do not agree on all issues. Therefore, Current Cost Accounting doesn’t rewards managers for profits from holding gains and losses which isn’t an actual profit and also gives useful information to investors. Holding gains are different from trading income as they are due to market-wide movements which are beyond the control of the management. Differentiating operating profit from holding gains and losses has claimed to enhance the usefulness of information being provided by CCA. The business profit in CCA shows how the entity has gained in financial terms the increase in cost of its resources, which is ignored by historical cost accounting. Unlike Historical Cost Accounting, there is no need for inventory cost flow assumptions such as last-in-first-out and weighted average. It is more complex than the traditional accounting, and it has created controversy about what adjustments are appropriate. It takes into account time-value of money and inflation. Current Cost Accounting (CCA) attempts to provide more realistic book values by valuing assets at current market buying prices.