Legal information

Introduction to the article: What is the difference between the market method and the cost method in demolition evaluation? Which evaluation method provides the larger amount of compensation?

1. Different perspectives for determining value:

The cost method determines the value of repurchasing the asset based on the current market price, while the market method determines the value based on the transaction price of the asset on the market. Ying Ting believes that the former is mainly determined from the buyer's perspective, that is, based on the cost of purchasing and constructing an asset; the latter is determined from the seller's perspective, that is, the sales price in the market.

2. The composition of the assessed value may not be exactly the same:

The current market price in the market method refers to the independent price of the asset, which is adopted in the transaction process. The replacement cost not only includes the asset's own price (purchase and construction price), but also includes the asset's transportation and miscellaneous expenses, installation and commissioning fees, etc.

3. Different relationship with original cost data:

The application of the market method is not directly related to the original cost, while certain calculations in the cost method require the use of the original cost and original data of the assets being evaluated.

4. The two methods have different operating procedures, and different ideas for obtaining data and determining indicators: The cost method determines the assessed value based on the purchase and construction cost of the new asset after deducting various losses (or depreciation) of the assessed asset; the market rule determines the assessed value based on the price of the reference object, taking into account various factors that differ between the assessed asset and the reference object, and making adjustments.

5. Loss of asset value due to idle assets and reduced income due to changes in external conditions will cause economic depreciation. Using the cost method to evaluate machinery and equipment: The Yingting Demolition Team learned that from a theoretical perspective of asset valuation, any use of the cost method to evaluate machinery and equipment should take into account its economic depreciation factors. However, from the perspective of specific evaluation practices, whether economic depreciation factors must be taken into account when using the cost method to evaluate machines depends on the circumstances of the specific evaluation object. If the evaluation object is a single piece (piece) of general-purpose equipment, since its profitability or utilization rate cannot be calculated separately, the economic depreciation factor of the single piece (piece) equipment does not necessarily need to be considered. If the evaluation object is a production line and its production capacity and profitability can be calculated separately, its economic depreciation factors should be considered.

Yingting reminds you:

If the demolished persons have objections to the assessment report, they should apply for review in a timely manner. They can also ask a lawyer to intervene in the assessment process and participate in negotiations. If the expropriated person or the housing expropriation department has objections to the assessment results, they shall apply to the real estate price assessment agency for review of the assessment within 10 days from the date of receipt of the assessment report. To apply for re-examination, a written re-examination application should be submitted to the original real estate price assessment agency and the problems in the assessment report should be pointed out. The original real estate price assessment agency shall review the assessment results within 10 days from the date of receipt of the written application for review assessment. After review, if the original assessment result is changed, a new assessment report shall be issued; if the assessment result has not changed, the applicant for review and assessment shall be informed in writing. If the expropriated person or the housing expropriation department has objections to the review results of the original real estate price appraisal agency, they shall apply to the expert committee for appraisal of the location of the expropriated houses within 10 days from the date of receipt of the review results. If the expropriated person is dissatisfied with the compensation decision, he or she may apply for administrative reconsideration or file an administrative lawsuit in accordance with the law.

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