We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is Value in Use?

Mary McMahon
By
Updated: May 17, 2024
Views: 10,871
Share

Value in use is the value an asset provides for its owner as long as it is in use. This can differ from other forms of value like market value and can be useful for evaluating the utility of an asset to determine whether it should be retained, repaired, or taken out of service. Calculating value in use can be complex, and it is sometimes helpful to consult attorneys and accountants, depending on the nature of the asset, to get assistance with accurate valuation.

Real estate is an example of an asset that may be valued using this method. Owning a particular piece of real estate could have advantages like savings as a result of good financing, low taxes because of unique zoning, or more income because of the specific location. These savings, or the extra cost to replace the asset if the owner no longer had it, could be more than the fair market value; selling the property would result in taking a loss because the owner would miss out on value in use.

For businesses, determining value in use can be important for making buying and selling decisions. An owner may determine that a given asset is not for sale at any price because of the high value, or would only be willing to consider a sale in special circumstances. Benefits like grandfathered zoning clauses can be irreplaceable; for example, an unusual zoning quirk might allow a property owner to build higher than the current laws. This brings immense value to the owner, and it might expire when the property sells, making it nontransferable.

Consumers may have an interest in this subject as it could influence purchasing decisions. Some companies market their products with a specific value in use in mind, showing consumers how their ownership will generate earnings or savings, providing value beyond the inherent market value of the asset. This can extend useful life and make a potential new purchase more appealing to consumers concerned about savings and spending.

Calculating value in use requires looking at savings or earnings brought in by the property and comparing it to similar assets. It can be difficult to do this correctly. A third party can perform a neutral assessment. It is not advisable to rely on assessments from parties with a financial interest in an asset, as they may have an incentive to overstate or understate value in use, creating an inaccurate picture of the asset's total value.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Editors' Picks

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.wisegeek.net/what-is-value-in-use.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.