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CS Professional · Corporate Restructuring, Valuation and Insolvency · Overview of Business Valuation

A valuer states that the value of Rohan Pharma Ltd is determined as at 31 March, using information available and market conditions existing on that date, and ignores a major regulatory approval received two months later that nobody could foresee at that date. Which valuation principle is the valuer following?

The valuer follows the principle that value depends on the valuation date. A valuation reflects conditions and information known or reasonably knowable at that date, so a later, unforeseeable regulatory approval is ignored. Value is not fixed for all purposes or equal to historical cost.

  1. AValue depends on the valuation dateCorrect
  2. BValue is always the same for all purposes
  3. CValue equals historical cost
  4. DValue is fixed by the seller alone

Explanation

Value is time-specific: it reflects what was known or knowable at the valuation date. Later unforeseeable events are not incorporated. The other statements are incorrect, since value varies with purpose and is not historical cost or seller determined.

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