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  • Cost Approach Method: Technology Valuation and Negotiation

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    This document discusses using the cost approach method to value technology. The cost approach values an asset based on the cost to replace or reproduce it. It involves calculating the gross replacement value, replacement value, net replacement value, and current value. To value technology using this method, a company would calculate the direct costs incurred to produce the asset, such as materials, salaries, and fees. Applying the cost approach allows companies to create value from innovation by estimating the current costs required to replace or reproduce structures and improvements with an added profit or incentive amount.

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    This document discusses using the cost approach method to value technology. The cost approach values an asset based on the cost to replace or reproduce it. It involves calculating the gross replacement value, replacement value, net replacement value, and current value. To value technology using this method, a company would calculate the direct costs incurred to produce the asset, such as materials, salaries, and fees. Applying the cost approach allows companies to create value from innovation by estimating the current costs required to replace or reproduce structures and improvements with an added profit or incentive amount.

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    © All Rights Reserved
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    9 views1 page

    Cost Approach Method: Technology Valuation and Negotiation

    Uploaded by

    carlos valdez
    This document discusses using the cost approach method to value technology. The cost approach values an asset based on the cost to replace or reproduce it. It involves calculating the gross replacement value, replacement value, net replacement value, and current value. To value technology using this method, a company would calculate the direct costs incurred to produce the asset, such as materials, salaries, and fees. Applying the cost approach allows companies to create value from innovation by estimating the current costs required to replace or reproduce structures and improvements with an added profit or incentive amount.

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    © All Rights Reserved
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    TECHNOLOGY VALUATION AND NEGOTIATION

    COST APPROACH
    METHOD
    Jorge Alexander silva - Code: 86.043.385
    Group: 212032_85
    29 - March - 2021

    DEFINITION
    This approach establishes that the value of a
    good is comparable to the cost of replacement
    or reproduction of a new one that is equally
    desirable and with similar utility or functionality
    to the one being valued.
    The Cost Approach is the result of the sum of
    the Commercial Value of the Land plus the
    Replacement Value of the Improvements.

    THE COST APPROACH IS RELATED TO


    Gross replacement value (VRB)
    Replacement value
    Net replacement value (NRV)
    Current value (VA)
    Completed building hypothesis (H.E.T)

    PROCESSES RELATED TO CALCULATING THE


    VALUE OF TECHNOLOGY USING THE COST
    METHOD
    It should be used when the purpose of the
    valuation is accounting and has the advantage
    of its ease of calculation
    If the company has purchased the asset, it
    is valued at the price paid.
    If the company has produced the asset, the
    costs to be charged by the company will be
    the direct costs incurred to produce it
    value = cost (how much did it cost to get it?)
    (materials, salaries, fees and registration (+) ease of calculation (price, fees, API fees,
    fees). imputed R&D costs)
    (-) does not inform about how much a 3rd would
    pay us to sell or license it

    HOW CAN COMPANIES CREATE VALUE FROM THEIR


    INNOVATION, APPLYING THE COST APPROACH
    METHOD?

    Because its development is based on estimating the


    current cost to replace or reproduce the existing
    structures and improvements of any company as well as
    establishing a profit or incentive.
    The cost in a company is guaranteed as the price paid for
    the goods and services or the amount required to create
    or produce the good or service in an innovative way and
    efficient results.

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