how physical asset valuation (PAV) and research and
development (R&D) costs are likely to pose risks?
Answers
Answer:
Hi buddy
Explanation:
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Physical asset valuation is the process of ascertaining the fair market value of an asset. Asset valuation comprises subjective as well as objective measurement. the cost which company in commerce in the process of developing new goods and services to suit the companies and consumers needs is known as research and development cost.
Explanation:
Physical asset valuation can pose considerable risk. valuation dress is the financial risk and assert is overvalued and is worth it's much less than the expected when that asset matures or is sold. What is the contribute to valuation risk comprise market instability, incomplete data, financial modelling uncertainty & poor data analysis why the person in charge of ascertaining the value of the asset. Valuation risk could be of concern aur lenders, investors, financial regulators and many other people involved in the financial market. Moreover any overvalued asset could create losses for the company and result in reputational risk; thereby affecting the credit ratings, management structures and funding cost of the financial institutions. To alleviate this risk it is essential to to offer transparency and make sure the integrity and data consistency, processes and models that are used to "process and report calculations" in valuations.
Risk and development cost always carries an element of risk since it includes finding out new and untested ideas. The common risk comprise modified or new products or services prove to be more difficult or more costly to develop than expected; developing a product or service which is not commercially successful & ; initiating the development of a product which turns out to be infeasible. Research and development cost is significantly higher than for other investments and can even ensure a business future survival. Moreover there would not be always a return on investment and at times the company could lose their investment entirely. Research and development cost on existing product in order to enhance its has higher chance of success then that which is aimed at generating a new product; however the rewards of such cost are likely to be follower