'Different bases of value may require a particular Premise of Value or allow the consideration of multiple Premises of Value' - Referring International Valuation Standards discuss briefly on different Premises of Valuati

Premise of Value/Assumed Use A Premise of Value or Assumed Use describes the circumstances of how an asset or liability is used. Different bases of value may require a particular Premise of Value or allow the consideration of multiple Premises of Value. Some common Premises of Value are: highest and best use, current use/existing use, orderly liquidation, and forced sale. Premise of Value - Highest and Best Use Highest and best use is the use, from a participant perspective, that would produce the Highest value for an asset. Although the concept is most frequently applied to non-financial assets as many financial assets do not have alternative uses, there may be circumstances where the highest and best use of financial assets needs to be considered. The highest and best use must be physically possible (where applicable), financially feasible, legally allowed and result in the highest value. If different from the current use, the costs to convert an asset to its highest and best use would impact the value. The highest and best use for an asset may be its current or existing use when it is being used optimally. However, highest and best use may differ from current use or even be an orderly liquidation. The highest and best use of an asset valued on a stand-alone basis may be different from its highest and best use as part of a group of assets, when its contribution to the overall value of the group must be considered. The determination of the highest and best use involves consideration of the following: To establish whether a use is physically possible, regard will be had to what would be considered reasonable by participants. To reflect the requirement to be legally permissible, any legal restrictions on the use of the asset, e.g., town planning/zoning designations need to be taken into account as well as the likelihood that these restrictions will change. Premise of Value - Current Use/Existing Use Current use/existing use is the current way an asset, liability, or group of assets and/or liabilities is used. The current use may be, but is not necessarily, also the highest and best use. Premise of Value - Orderly Liquidation An orderly liquidation describes the value of a group of assets that could be realised in a liquidation sale, given a reasonable period of time to find a purchaser (or purchasers), with the seller being compelled to sell on an as-is, where-is basis. Premise of Value - Forced Sale The term 'forced sale' is often used in circumstances where a seller is under compulsion to sell and that, as a consequence, a proper marketing period is not possible and buyers may not be able to undertake adequate due diligence. The price that could be obtained in these circumstances will depend upon the nature of the pressure on the seller and the reasons why proper marketing cannot be undertaken. It may also reflect the consequences for the seller of failing to sell within the period available.