Valuation of real estate, machinery and equipment, intangible assets, goods in stock is for various purposes and can be ordered for: purchase/sale; merger/joint venture; leasing purposes; fairness/solvency; property records; financing; insurance; bankruptcy.

The Cost Approach

The cost approach estimates value based on the cost of reproducing or replacing, less depreciation arising from physical deterioration and functional and economic obsolescence, if present and measurable. The cost approach is based on the proposition that an informed purchaser would pay no more for a property than the cost of producing a substitute property with the same utility. 
The cost approach ordinarily supplies the most reliable indication of the value of land improvements, special purpose buildings, special structures, utilities, and special machinery and equipment.

The Market Approach

The market approach establishes value through analysis of recent sales of comparable property. In the valuation of real estate, similar properties recently sold or offered for sale in the current market are analyzed and compared with the property being appraised, with adjustments being made for differences in such factors as time of sale; location; type, age and condition of the improvements; and prospective use. This approach is also used in the valuation of machinery and equipment for which there is a known market.

The Income Approach

The income approach establishes the value of the property on the basis of capitalization of the net earnings that would be generated if the property were leased or, in the case of an enterprise the net earnings generated by the business.

In any appraisal study, all there approaches to value must be considered, as one or more may be applicable to the subject property.