Chapter Two Fair value measurement and Impairment

Replacement cost new (RCN): The estimated costs to construct the most economically prudent substitute property with equivalent utility and functionality at the valuation date; as such, the RCN typically would have cured all functional deficiencies and many forms of obsolescence. The RCN of a substitute property with greater utility than the subject may be utilized when equivalent utility is no longer available.

3^ Developer profit is the amount the entrepreneur actually achieves by the end of the development.

4^ Entrepreneurial incentive is a market-derived figure that represents the amount an entrepreneur expects to receive as compensation for assuming the risk associated with the development of a property; this is the entrepreneur’s motivation.