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I expected so. No basis in market data whatsoever. Certainly less credible than the approach you were criticizing above, and far more likely to hit left field.
You mean pulling a number out your **** by applying an arbitrary percentage of defect for which you have zero support for is 'credible'? At least I can go to a depreciation chart or apply straight-line depreciation and in doing so, who can challenge me with "market data" when no such data exists? Appraiser's judgement still means something and if it is your judgement to apply an arbitrary number without support, how is that superior to finding out from the manufacturer the typical life cycle of an attached real item and applying a straight line depreciation...which is a method at least taught in the textbooks weak as it may be. I don't know any text that says pull a NOYA.
I understand you are committed to fabricating the numbers when it is expedient. Odd that you would criticize a method that is based on market data and verified to produce credible results. So if I understand your approach, those improvements have the same value in western Oklahoma or eastern Montana, or Central Park, or San Francisco. Got it. So much for consideration of functional or external obsolescence. Let me know when you get to that section in the book and explain how those are addressed in the Age/Life formula for market value.
WHAT MARKET DATA? You said you'd apply a 50% ADDITIONAL discount to the estimate. How is that "Market data"? That number is pure PFA. At least I can go to a depreciation schedule or take a straight-line depreciation JUST LIKE IT IS TAUGHT IN THE TEXTBOOKS.
Read the thread and you will find the market data. As I suggested above, let me know when you get to that portion of the textbook that deals with external and functional obsolescence. I read that part in about 1992, and haven't yet forgotten it. And depreciation and amortization are accounting constructs They are not valuation concepts when not informed with "any" market data. In that process, they are simply guesses packaged to mislead and imply credibility and reliability where there is none.WHAT MARKET DATA? You said you'd apply a 50% ADDITIONAL discount to the estimate. How is that "Market data"? That number is pure PFA. At least I can go to a depreciation schedule or take a straight-line depreciation JUST LIKE IT IS TAUGHT IN THE TEXTBOOKS.
Understanding Straight-Line Basis for Depreciation and Amortization
Learn how to calculate asset depreciation and amortization using the straight-line basis method. Discover its advantages, drawbacks, and practical examples in this guide.www.investopedia.com