Indregning af investeringsejendomme til dagsværdi: Fokus på det retvisende billede

Abstract

This paper investigates the challenges and uncertainties involved in valuing investment properties, as well as the importance of a fair valuation for compliance with the Danish Financial Statements Act. The valuation of investment properties is complex and involves several factors such as leases, location, condition, and market conditions, which may cause under- or overvaluation. The research question addressed in this paper says as follows - how can the valuation of investment properties be ensured to comply with the requirements of the Danish Financial Statements Act to provide a true and fair view of a company's financial situation.
The project highlights the risks associated with incorrect valuations, such as misinformed investment decisions, and the need for transparency in financial reporting. The research is based on the experiences of auditors who regularly work with investment properties. The study examines the regulations and guidelines provided by the law and international accounting standards, as well as the effects of a tendency to value investment properties optimistically, which prompted the issuance of a note on the accounting treatment of investment properties.
In the assignment we will use a mixed-method approach, including a literature review, case studies, and an interview with a state authorized public accountant, to gather data and insights. The findings of the paper will provide a deeper understanding of the challenges and complexities involved in the valuation of investment properties, as well as the methodologies and approaches used to reach accurate valuations.
It provides a significant contribution to the field of accounting and auditing by highlighting the importance of correct valuation of investment properties. The study reveals the challenges in the valuation process, the methods used to overcome them, and the implications of incorrect valuations.
It also notes that the current downward trend in the property market may lead to an aggressive approach to valuations by management, potentially resulting in larger discrepancies.
The assignment points out that a thorough valuation, which considers estimates and uncertainties, can result in greater transparency and a more true representation of a company's financial situation. This contributes to better investment opportunities and a more sustainable economic development.
The study also identifies the challenges associated with property valuation and recommends the use of external experts to mitigate the risks of misvaluation.
We will in the paper provide insights into the implications of incorrect valuations and highlight the need for transparency in financial reporting. The research contributes to the understanding of the challenges and best practices in valuing investment properties, which can have significant implications for investment decisions and financial reporting.
The assignment concludes that the yield capitalization method is best suited when there is limited access to data and the expected future cash flows are constant from year to year. The method is relatively simple and less resource-intensive, as the calculation using the income approach requires less data input than using the DCF model.
It concludes that one of the advantages of the DCF model is that it provides a more detailed overview of cash flows year by year, which gives management better opportunities to address the various factors that affect valuation. Additionally, the DCF method is considered to be more accurate than the yield capitalization method, as it allows for the consideration of risks and estimates on an annual basis in the budget period and the terminal year, providing management with a better basis for decision-making.
As a result of our investigations, the choice of valuation method should always be a specific assessment made based on management's competencies, the purpose of the property, and the utility value relative to the resource requirement.
Finally, the paper notes that the true market value of a property can only be determined when it is sold between independent parties.