Value in Use
Definition - What does Value in Use mean?
Divestopedia explains Value in Use
Value in use is the net credit value of a cash flow or other benefits that accrue to a specific owner for a specific use. It may be different from its market value. If special benefits, such as agglomeration benefits, extraordinary financing, grandfathered zoning, etc. accrue to the user, the value in use for the owner is higher than the market value. This is considered to be an investment value.
The value in use for an asset is the value or worth of that asset under a specific purpose (i.e. as it is being used at present). The value in use is concept can be used for business valuation when determining the allocation of a purchase price. Entities are required to conduct impairment tests where there are indications of impairment to an asset or a cash generating unit. This is also applicable to goodwill and other tangible assets acquired in business combinations.
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