Department of economics couse work from economics

2.2 National standards of republic of Uzbekistan of property assessment.
This regulatory document was adopted in accordance with the Law of the Republic of Uzbekistan “On Valuation Activities”, Decree of the President of the Republic of Uzbekistan dated March 2, 2020 No. UP – 5953 “On the State Program for the Implementation of the Strategy of Action for the Five Priority Directions of Development of the Republic of Uzbekistan in 2017 - 2021 in “The Year of the Development of Science, Education and the Digital Economy” and Decree of the President of the Republic of Uzbekistan dated July 1, 2019 No. PP – 4381 “On Measures to Further Improve Evaluation Activities and Simplify Implementation Mechanisms for Low Profit and Inactive Enterprises with State Participation” based on the principles of international valuation standards, taking into account the best foreign practices.
The State Assets Management Agency created a working group and experts were involved to draft a Unified National Assessment Standard. The working group included qualified specialists, members of public assessment organizations and appraisers, as well as experts from international companies and organizations. The unified national valuation standard determines the procedure for valuation, including the valuation of property, types of value, object of valuation, application of appropriate approaches and valuation methods, as well as the procedure for valuation of property of all forms of ownership. This document envisages the harmonization of national assessment standards with the principles of international assessment standards and the unification of 13 existing departmental normative acts in accordance with the concept of improving normative activity, approved by Decree of the President of the Republic of Uzbekistan from 8 August 2018 No. UP-5505. The unified national valuation standard includes principles, conditions and tariffs used in valuation activities, valuation tasks, research and analysis in the valuation process, structure of the valuation report, valuation databases, valuation approaches and methods, valuation of business and the right to participate in business , valuation of real estate, valuation of intangible assets, valuation of inventories, valuation of machinery and equipment, valuation of housing stock for the purpose of privatization.
Purpose of National standards of republic of Uzbekistan of property assessment is to determine differences of estimates for loans security, mortgages and debt obligations from the estimates for the financial reporting which are carried out according to National standards of republic of Uzbekistan of property assessment N4-N5 establishes framework in which the Appraiser can carry out property assessment on the instructions of the credit institutes and other organizations providing financing on security the specific fixed assets unlike the crediting of physical persons and companies based on trust. Consultations of the Appraiser can extend to other areas, however National standards of republic of Uzbekistan of property assessment belongs only to property assessment for loans security, mortgages and debt obligations.
Many agreements on financing are provided with specific assets. The concept of the providing accepted according to the loan, the mortgage or other debt obligation can be determined more widely. In certain cases pledge of equity of the company without consideration of specific assets can act as providing. As a rule, in case of assessment of specific assets as ensuring financing the Appraiser deals with market value. Sometimes, depending on circumstances, provisions of the legislation and requirements of the party accepting property as providing, the Appraiser can consider the cost of operating plant, salvage value or other cost types, however market value interests those who provide financing, as a rule.
Though objects of property differ on their location, usefulness, age, degree of suitability and other factors, the basic principles of assessment remain invariable. It is important that Appraisers consistently applied valuation principles within coverage of National standards of republic of Uzbekistan of property assessment, carrying out the objective assessment clear and the users meeting requirements. The market value determined at NSOI N2, remains that base on which the Appraiser builds the work. It is determined as follows: market value is settlement sum of money for which exchange of asset for date of assessment between the interested buyer and the interested seller as a result of the commercial transaction after carrying out proper marketing in case of which each of the parties would be effective would take place, being knowledgeable, is prudent also without coercion. All methods, methods and procedures of measurement of market value if they are applicable and are used pertinently and correctly, lead to general expression of market value when they are based on the criteria having market origin. The method of comparison of sales or other methods of market comparisons shall proceed from market researches. Construction costs and the amount of depreciation shall be determined on the basis of the analysis of payment of costs under market data and cumulative depreciation. The capitalization method of the income or method of the discounted cash flow shall be based on the cash flows determined by the market and on the return rates based on data of the market. Though availability of information, and also situation in the market and around the asset will determine what of evaluation methods most we accept and is adequate, use of any of the above-stated procedures shall lead to establishment of market value if each of methods is based on market data.
Applicability of various methods and assessment procedures of market value is determined proceeding from method by what sale of property in the public market is usually performed. Being based on market information, each method is comparative method. In each situation connected with assessment, some one or several evaluation methods give the greatest idea of activities of the public market. In case of each task on establishment of market value the Appraiser shall consider all methods and determine the most suitable of them. Investment value is the value of a property for a particular investor or group of investors with established or set investment objectives. This subjective concept relates a particular property to a particular investor, group of investors or entity that has specific investment objectives and/or criteria. The value of the operating enterprise is the value of the business as a whole. This concept implies an assessment of a continuously operating entity, on the basis of which it is possible to distribute or separate the "total value of the operating enterprise" into its component parts in accordance with their contribution to the total value, but none of these components in itself is the basis for market value. Therefore, the concept of "value of an operating enterprise" can only be applied to property that is an integral part of a business or organization.
Insured value - the value of the property provided for by the provisions of the insurance contract or policy.
Value for tax purposes, or tax value - the value calculated on the basis of definitions contained in the relevant regulatory legal acts of the Republic of Uzbekistan relating to the taxation of property. While some instruments of this kind may refer to market value as the basis for valuation for tax purposes, the methods proposed for calculating this value may produce results other than the market value as defined in National Property Valuation Standard. Therefore, it cannot be assumed that the value for tax purposes corresponds to the definition of market value given in the National standards of republic of Uzbekistan of property assessment, unless there is an indication to the contrary in the normative acts of the Republic of Uzbekistan. Residual replacement cost is an estimation method based on the calculation of the current market value of a land plot with its existing use in the amount of the total costs of replacing structures minus accruals for physical wear and tear and all relevant forms of impairment. The result, which is a non-market type of value, is called the residual value of substitution. It depends on the potential profitability of the property.
Disposal value - the value of the property , when it is considered as a set of materials contained in it for sale, and not for its continued use without additional repair and improvement. This cost can be expressed as gross or as net in the latter case, it may coincide with the "net cost of realization". In either case, the included or excluded components must be defined. Liquidation value, or the value of the forced sale - The amount that can reasonably be expected to be received from the sale of the property in a period too short to meet the time frame for marketing specified in the market value determination. The valuation of the liquidation value of the property may be based on the market value of the property, taking into account the discounting of the latter on the factor of the need to sell the property in a short time due to the presence of compelling circumstances, as well as additional costs for the maintenance and protection of the specified property. The value of the association is any additional value given by the merger of two or more interests when the value of the combined interest is worth more than the sum of the original interests. A special buyer is a buyer with an existing interest in another asset that has an economic, legal or geographical connection to the asset being valued. A special cost is an amount in excess of the market value that a special buyer would pay to reflect the benefits resulting from a combination of interests that in the market may not be available to buyers at all. A special cost is an additional value that may exist more for a particular owner or user or a potential owner or user than for the market as a whole, i.e. the special cost is applicable only to a buyer with a special interest.
Market value is the value in exchange or amount of money that would have been brought by a property offered for sale on the open market on the valuation date under conditions that meet the requirements contained in the definition of market value. To establish market value, the appraiser must first establish the most efficient use or most likely use. Such use may be an extension of the existing use or some alternative to it. This issue is resolved on the basis of market data. Market value is established through the application of valuation methods and procedures that reflect the nature of the property and the circumstances in which the property is most likely to be sold on the open market. The most common methods of establishing market value include the sales comparison method, the income capitalization method or the discounted cash flow method, and the cost method.
There are two options for using the cost method, one of which can be used to establish market value, and the other cannot. When the cost method is used to establish market value, all elements of the method are built on open market data. If the cost method is applied to cases of non-market types of value, then non-market elements are taken. A special place is occupied by the method of replacement costs taking into account depreciation , which combines market and non-market elements and which cannot be considered as a method of assessing market value. These different cases of cost approaches should not be confused and there is a risk of their misinterpretation in determining, presenting or applying market values.
All methods, methods and procedures for measuring market value, if applicable, are used correctly and are based on criteria of market origin, lead to a general expression of market value. The sales comparison method or other methods of market comparison should come from market research. Construction costs and the amount of depreciation should be determined on the basis of an analysis of market data on costs and the amount of depreciation. The method of capitalizing income or the method of discounted cash flow should be based on cash flows determined from market positions and rates of return based on market data. Although the possibilities of obtaining information, as well as the situation on the market and around the property itself, determine which of the valuation methods is most acceptable and adequate, the use of any of the above procedures should lead to the establishment of market value, if each of the methods is based on market data. The applicability of market value methods and procedures is determined by the manner in which the property is usually sold on the open market. Being based on market information, each method is a comparative method. In each case, the valuations provide one or more methods to give the most complete picture of open market activity. At each task to determine the market value, the appraiser must consider all the methods and determine the most suitable ones.
The concepts of market value and fair value are not synonymous. National accounting standards determine and use market value, fully assuming that assets may be sold under a variety of circumstances and conditions. In order to avoid confusion and possible confusion, the measurement report should contain a definition of the market value and a description of its application to the asset being measured, an explanation of the conditions under which this market valuation is applied, and an indication of how the asset usually passes hands in the market. The value of fixed or long-term assets reported in the financial statements and related accounts is commonly referred to as the "net accounting sum" of those assets. The net accounting amount is the gross accounting amount less accrued depreciation. The net accounting amount is usually identified with the "net overvalued amount", determined either by indexing "historical" costs or by measuring or periodically revaluing assets. National accounting standards refers to the value framework for situations where the value of assets must be based on valuation or periodic revaluation reflecting price changes. In this regard, the net operating costs of replacing an asset will form the basis for its valuation where market value can be assessed. Normally, property valuations carried out in connection with the preparation of financial statements and related accounts by definition require that assets in the possession of the owner be valued on the basis of their existing use and the fact that the business continues to operate. However, some of the assets at the disposal of the owner may later be unnecessary for the enterprise. If such assets are declared redundant by the directors of the enterprise, they should be evaluated not on the basis of the existing, but on the basis of the most effective use. Similarly, the assets of an enterprise, which are usually classified as investments, are valued not on the basis of the existing, but on the basis of the most efficient use. The logical basis for distinguishing among all assets those that are used is that the business, for practical reasons, cannot sell the assets necessary for its activities, and at the same time remain productive. The sale of such assets would be incompatible with the continuation of this business. However, the measurement of the market value of the assets used correctly reflects the contribution of these assets from the point of view of the market and is consistent with the methods of market value used in the valuation of other assets. Usually, during the valuation process, the appraiser receives guidance from the directors of the enterprise or from their professional advisers as to whether these assets are retained for existing use, whether they are superfluous in comparison with the needs of the enterprise or are classified as an investment. In the absence of specific such guidance, the appraiser, on the basis of his experience, knowledge and qualifications, is obliged to establish to which category the asset belongs by examining the available facts. In this case, such a classification and its bases should be fully disclosed. Continuing the business is fundamental to accounting and to making the assumption in valuation that the business in question will continue to operate in the future. This concept is completely different from the concept of the value of an operating enterprise, which is applicable only to the value of the business as such and includes all assets and liabilities. This type of value is not suitable as a basis for valuing individual assets. In contrast, market value and, in certain circumstances, depreciation replacement costs are acceptable bases for valuing an entity's individual assets for financial reporting.