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What is the primary focus of the Circular issued by the Ministry of Finance?
What is the primary focus of the Circular issued by the Ministry of Finance?
Which approaches are included in Vietnam's valuation standards according to the Circular?
Which approaches are included in Vietnam's valuation standards according to the Circular?
When does the Circular take effect?
When does the Circular take effect?
What will happen to Circular No. 126/2015/TT-BTC following the enactment of this Circular?
What will happen to Circular No. 126/2015/TT-BTC following the enactment of this Circular?
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Who is responsible for the implementation of the Vietnam Price Appraisal Standards?
Who is responsible for the implementation of the Vietnam Price Appraisal Standards?
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What does the variable Hi represent in the physical wear and tear calculation?
What does the variable Hi represent in the physical wear and tear calculation?
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Which type of functional wear is caused by high operating costs?
Which type of functional wear is caused by high operating costs?
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How is functional wear value determined for remediable functional wear and tear?
How is functional wear value determined for remediable functional wear and tear?
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What does the variable Ti denote in the context of appraisal assets?
What does the variable Ti denote in the context of appraisal assets?
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The physical wear and tear rate is calculated as what?
The physical wear and tear rate is calculated as what?
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Which of the following best describes irreparable high capital costs?
Which of the following best describes irreparable high capital costs?
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What does the income-based approach aim to determine?
What does the income-based approach aim to determine?
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Who is the Deputy Minister mentioned in the document?
Who is the Deputy Minister mentioned in the document?
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What is the main focus of the attached Circular No. 32/2024/TT-BTC?
What is the main focus of the attached Circular No. 32/2024/TT-BTC?
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Under what condition should the direct capitalization method be used?
Under what condition should the direct capitalization method be used?
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What is evaluated to determine the total value of the loss affecting an asset?
What is evaluated to determine the total value of the loss affecting an asset?
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When was the Circular No. 32/2024/TT-BTC issued?
When was the Circular No. 32/2024/TT-BTC issued?
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Which method is appropriate for analyzing an income stream with annual fluctuations?
Which method is appropriate for analyzing an income stream with annual fluctuations?
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What is the primary approach to the standards discussed in the document?
What is the primary approach to the standards discussed in the document?
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What aspect of annual income is capitalized in the income-based approach?
What aspect of annual income is capitalized in the income-based approach?
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Which ministry is associated with the issuance of Circular No. 32/2024/TT-BTC?
Which ministry is associated with the issuance of Circular No. 32/2024/TT-BTC?
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Which article begins the general provisions in Chapter I?
Which article begins the general provisions in Chapter I?
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What role do price appraisers have according to the article?
What role do price appraisers have according to the article?
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What is the legislative date mentioned for the Circular?
What is the legislative date mentioned for the Circular?
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Which of the following represents a misconception about the capitalization rate?
Which of the following represents a misconception about the capitalization rate?
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Which chapter outlines the general provisions?
Which chapter outlines the general provisions?
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What action should be taken when external factors cause income to be lost?
What action should be taken when external factors cause income to be lost?
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What type of standards does this document discuss?
What type of standards does this document discuss?
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How is the document categorized in terms of legislative structure?
How is the document categorized in terms of legislative structure?
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What is the position of Le Tan Chien?
What is the position of Le Tan Chien?
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Circular No. 32/2024/TT-BTC relates to procedures in which sector?
Circular No. 32/2024/TT-BTC relates to procedures in which sector?
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Which criterion aims to ensure the lowest total gross adjustment value in asset appraisal?
Which criterion aims to ensure the lowest total gross adjustment value in asset appraisal?
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What format does the document follow for standards and guidelines?
What format does the document follow for standards and guidelines?
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What is the main goal of evaluating market supply and demand movements before finalizing asset appraisal?
What is the main goal of evaluating market supply and demand movements before finalizing asset appraisal?
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What is the significance of the information provided in the Circular?
What is the significance of the information provided in the Circular?
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What defines the cost-based approach in price appraisal?
What defines the cost-based approach in price appraisal?
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Which of the following factors is not considered in the smallest total gross adjustment value?
Which of the following factors is not considered in the smallest total gross adjustment value?
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What does physical wear and tear refer to in appraisal terms?
What does physical wear and tear refer to in appraisal terms?
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Which entity is primarily responsible for price appraisal services according to the Vietnam Price Appraisal Standard?
Which entity is primarily responsible for price appraisal services according to the Vietnam Price Appraisal Standard?
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In the context of the comparative asset analysis, what should be the goal regarding the adjustment margin?
In the context of the comparative asset analysis, what should be the goal regarding the adjustment margin?
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For whom is the price appraisal report primarily intended?
For whom is the price appraisal report primarily intended?
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Which factor is NOT considered when determining the capitalization rate using the comparison method?
Which factor is NOT considered when determining the capitalization rate using the comparison method?
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What is essential for the calculation of net income and operating expenses in comparable assets?
What is essential for the calculation of net income and operating expenses in comparable assets?
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Which aspect is NOT part of the information needed to determine the capitalization ratio using asset loans?
Which aspect is NOT part of the information needed to determine the capitalization ratio using asset loans?
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In the loan capitalization coefficient calculation, what does NOT factor into the calculation?
In the loan capitalization coefficient calculation, what does NOT factor into the calculation?
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Which of the following descriptions best defines the equity capitalization rate?
Which of the following descriptions best defines the equity capitalization rate?
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What adjustment is necessary when comparing assets in the comparison method?
What adjustment is necessary when comparing assets in the comparison method?
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How is the loan capitalization coefficient calculated?
How is the loan capitalization coefficient calculated?
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What type of assets does the analysis of loans - equity capital method apply to?
What type of assets does the analysis of loans - equity capital method apply to?
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Study Notes
Circular Promulgating Vietnam's Valuation Standards
- Purpose: To promulgate Vietnam's valuation standards for market-based, cost-based, and income-based approaches.
- Basis: Based on Price Law (June 19, 2023) and Government Decree (April 20, 2023) about Ministry of Finance functions.
- Effective Date: July 1, 2024
- Expiration Date: August 20, 2015 Circular (No. 126/2015/TT-BTC) becomes invalid.
- Enforcement: Applicable to relevant organizations and individuals, who should report any issues to the Ministry of Finance.
Vietnam's Valuation Standards
- Market Approach: Standards for appraising prices based on market comparisons.
- Cost Approach: Standards for appraising prices based on the cost of creating similar assets.
- Income Approach: Standards for appraising prices based on the income derived from the assets.
Circular Implementation
- Organizations: Relevant organizations and individuals are responsible for implementing the new standards.
- Procedure: If problems arise during implementation the relevant parties should promptly report these problems to the Ministry of Finance for resolution.
Key Definitions
- Comparative Property: An asset that is the same or similar to the appraised asset.
- Similar Property: An asset similar in use, legal characteristics, economic-technical characteristics, and basic appraisal traits to the asset being appraised.
- Indicative Price: A comparable asset's adjusted price based on differences from the appraised asset.
- Total Net Adjustment Value: Total cost adjustment taking into account both upward and downward adjustments.
- Total Gross Adjustment Value: Total cost adjustment, using the absolute value of all adjustments.
- Market Approach: Valuation based on comparing assets with similar ones that have market prices.
- Methods (Market Approach): Comparison, average ratio, and transaction price methods (depending on asset type).
Comparison Methodology
- Purpose: Determine asset value through comparison between appraised assets and comparable assets.
- Application: Used for assets subject to transfer or public sale (or 3 comparable assets).
- Implementation: Survey and gather information about comparable assets, analyze, adjust for differences, and determine indicative prices for comparable assets to gauge the value of the asset in appraisal.
Survey and Collection of Comparable Assets
- Requirements: Objective and realistic, based on time closeness to the appraisal date and asset location.
- Minimum Comparable Assets: At least three must be considered with transfer or offer dates within the last 24 months of appraisal date.
- Information Gathering Sources: Official websites, contractual documents, reports, and interviews with relevant parties to collect data about comparable assets.
- Recording: Results must be documented and archived in a standardized information collection form.
Analysis of Comparable Assets
- Qualitative factors: Include characteristics like legal status, economic performance, technical traits, and other key traits.
- Quantitative factors: Include factors that can be expressed numerically or as a percentage.
- Comparison Types: Pairwise analysis, statistical analysis, regression analysis, and interviews with stakeholders.
- Adjustment Includes factors such as location, size for real estate and other related characteristics.
Cost Approach
- Definition: Determines value based on the cost to create a similar asset with the same function.
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Types of Wear:
- Physical wear (normal use)
- Functional wear (use efficiency from substitute asset replacement)
- Peripheral wear (local factors change value).
- Regeneration/Substitute Property: A comparable alternative (newer design/material) used to determine value.
- Total Wear Value: Total decline in value due to all wear categories determined through the combination of costs for repairs/replacements, income from sale of parts, and appropriate age/life estimates.
Income Approach
- Definition: Value derived from converting future income streams into present value using appropriate discount rates.
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Methods:
- Direct capitalization: A method to turn stable income projections into present value.
- Discounted cash flow: A method to project the future income streams of assets and then converting them into a present value.
Determination/Calculation specifics
- Factors: Include those related to total potential income like market conditions, capacity/risk of capacity, and operating costs.
- Capitalization Rate: Determined using comparative methods or financial analysis methods.
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Description
This quiz covers Vietnam's valuation standards based on market, cost, and income approaches. It also outlines the purpose, basis, effective date, and enforcement of the circular, highlighting the responsibilities of relevant organizations and individuals. Test your knowledge on these important regulatory standards in Vietnam.
