Under this method the value of the company is the cost to incur for rebuilding the company under current condition. There are threes methods to calculate the value:
a) Replacement Cost Method:
Replacement Value = Quantity of the material, labor and expenses incurred * Prevailing price
b) Commodity Index Method:
Replacement Value = Original value * Index of price change
c) Functional Value Method
Replacement Value = Comparable asset’s value * Productivity of target asset / Productivity of comparable asset
