Cost model: cost model and revaluation model.

Cost model, as the name suggests, is a mathematical model to estimate the cost components of a product and the approximate price range. The cost estimation model can effectively help the purchasing manager to determine whether the supplier's offer is reasonable, and to prepare sufficient data for the negotiation.

The revaluation model is to revalue the major fixed assets and current assets of an enterprise that have a large deviation between book value and actual value in accordance with the state's prescribed methods and standards. Enterprises that have already carried out asset revaluation in previous liquidation or have already carried out asset appraisal due to the need of specific economic behavior can no longer carry out revaluation.

Extended Information

The revaluation model is one of the two measurement options available in IAS 16 PPE. It means that we can revalue fixed assets at regular intervals and calculate depreciation at the newly valued value over the remaining useful life. Since the asset is not really disposed of, any revaluation gains or losses are put into the OTHER COMPREHENSIVE INCOME account.

The revaluation of assets is mainly operated by staff within the business or organization itself, so the revaluation methodology identified should be simple and easy to follow. It is necessary to solve the problem of the deviation between the book value and the actual value of assets, but also to minimize the workload and reduce the difficulty of the work. Determined the price index method, the national pricing method and the replacement cost method three basic revaluation methods, and provides for certain imported equipment can be revalued using the exchange rate adjustment method.

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