Tiêu đề 5. Latest Case studies.docx ✅

1 Case study 1: (Cost approach) A person constructs a warehouse of 3 m height of 500 Sq. m., built area in 1975., if the rate of construction in 1975 is @ Rs 350/m2 and in1995 is @ Rs. 3570/m2. Total life of the building is 40 yr. Assume 10% Salvage i) What is the present replacement cost of warehouse in 1995? a. 17,85,000/- b. 18,85,000/- c. 19,85,000/- d. 20,85,000/- ii) Which method of depreciation is used in this case a. WDV method b. Straight line method c. Linear method d. Sinking fund method iii) What is the net replacement value of Warehouse a. 8,81,750/- b. 9,81,750/- c. 10,81,750/- d. 17,85,000/- iv) What is the depreciation cost of the bldg. in the above case a. 8,81,750/- b. 9,81,700/- c. 8,03,250/- d. 17,85,000/- v) What is the historic cost of the building a. 1,75,000/- b. 9,81,750/- c. 8,03,250/- d. 17,85,000/- Sol.: Given Built up Area = 500 sq. m. Life of building =40 year Year of construction =1975 Plinth area rate in 1975 = Rs.350/ sq. m. Plinth area rate in 1995 = Rs.3570/ sq. m. Salvage value =10% i) Present replacement cost of warehouse in 1995 Replacement cost in 1995 =5003570= Rs.17,85, 000/ Hence answer is (a) ii) Which method of depreciation is used in this case Straight line method (b) iii) What is the net replacement value of Warehouse? Replacement cost in 1995 = Rs.17,85, 000 Depreciation by straight line method Age of building in 1995 =20 year Salvage value =10% Total Depreciation %age = = =45%=0.45 Net replacement value = (1- Total Depreciation) Net replacement value of Warehouse = (1-0.45)1785000 = Rs.9, 81, 750/ Hence answer is (b) iv) What is the depreciation cost of the bldg. in the above case? Depreciation cost of the bldg. = Total Depreciation) =0.45 Hence the answer is (c) v) What is the historic cost of the building? Historic cost of the building is cost of construction in 1975 Cost of construction in 1975 =350500= Rs.1, 75,000/ Hence the answer is (a) Case study 2: (Cost approach)
2 Mr. “A” has purchased an old house for Rs. 20,00,000/-. The brokerage paid is 1.50% & Stamp duty charges is 5%. After purchase he has done repair work immediately once for Rs. 1 lakh and second time for Rs. 2.50 lakh. He wants to sell property for Rs. 50,00,000/-and he sold that house to Mr. “B” after one year of purchase for sale price for Rs. 43,00,000/- by negotiation. Mr. “B” has paid 1% brokerage charges and stamp duty charges @ 5%. i) What is the acquisition cost for Mr. “A” a. 20,00,000/- b. 21,30,000/- c. 24,80,000/- d. 20,78,000/- ii) What is the gain amount for Mr. “A” from this re sale? a. 20,00,000/- b. 27,00,000/- c. 24,80,000/- d. 18,20,000/- iii) What is the amount spent by Mr. “A” for cost to cure? a. 4,80,000/- b. 2,13,000/- c. 3,50,000/- d. 2,50,000/- iv) What type of obsolescence is rectified in this case? a. Functional obsolescence b. Economic obsolescence c. Technological obsolescence d. None of the above v) In this case, the “cost to cure” obsolescence is viable? a. Yes b. No c. May be d. May not be vi) What is the original cost for Mr. “B” in this case? a. 20,00,000/- b. 21,30,000/- c. 43,00,000/- d. 45,58,000/- Sol.: Given For Mr. (A) Purchase Price = Rs.20,00,000/ Brokerages Charges = 1.5% Stamp Duty =5% Repair work done for first time = Rs.1,00,000/ Repair work done for second time = Rs.2, 50,000 Sale Price = Rs.43,00,000/ For Mr. (B) Purchase Price = Rs.43,00,000/ Brokerages Charges = 1.0% Stamp Duty =5% i) What is the acquisition cost for Mr. “A” Acquisition cost for Mr. “A” = Purchase Price+ brokerage Charges + Stamp Duty = 20,00,000+20,00,000+ 20,00,000 =20, 00,000(1+0.015+0.05) = Rs.21, 30,000 Hence the answer is (b) ii) What is the gain amount for Mr. “A” from this re sale Gain amount for Mr. “A” = Sale Price- (Acquisition cost+ Cost of repairs) =43, 00,000-(21, 30,000+1,00,000+2,50,000) = Rs.18, 20,000/ Hence the answer is (d) iii) What is the amount spent by Mr. “A” for cost to cure? Cost to cure = Rs.2,50, 000+Rs.1, 00, 000/= Rs.3, 50,000/ Hence the answer is (c) iv) What type of obsolescence is rectified in this case? Functional obsolescence (a) v) In this case, the “cost to cure” obsolescence is viable? Yes (a), as the owner has gained from the sale. iv) What is the acquisition cost for Mr. “B”
3 Acquisition cost for Mr. “B” = Purchase Price+ brokerage Charges + Stamp Duty = 43,00,000+43,00,000+ 20,00,000 =43, 00,000(1+0.010+0.05) = Rs.45,58,000/ Hence the answer is (d) Case Study 3: (On Cost approach) A Land area is 400 sq. m. with two storied building with total built up area of 400 sq. m. The roofing is changed to R.C.C 20 years back and the age of the flooring is 40 years. The total life of the building is 80 years and the building is well maintained. The present market value of land is Rs 15,000 per sq. m. and the prevailing building rate of construction near the town is 20,000 per sq. m. The developer’s profit is 15% of the cost and 1% towards submission charges and on 15% for functional obsolescence. i. What is the functional obsolescence at 15% on the replacement rate? a. 10,34, 460/- b. 33,92,000/- c. 36,00,000/- d. 46,08,000/- ii. What is the physical obsolescence with 10% salvage value? a. 10,08,000/- b. 33,92,000/- c. 36,00,000/- d. 46,08,000/- iii. What is the net depreciated value of the building? a. 40,00,000/- b. 33,65, 540/- c. 36,00,000/- d. 46,08,000/- iv. What is the total value of the property? a. 60,00,000/- b. 80,00,000/- c. 33,92,000/- d. 93,65,540/- v. What is the physical depreciation with 10% salvage, after allowing 15% for functional obsolescence with 1% submission charges. a. 10,08,000/- b. 31,0 3,380/- c. 36,00,000/- d. 46,08,000/- Sol: Given Land Area =400 sq. m. Built up Area = 400 sq. m. Life of Building =80 year Age of roofing =20 year Age of flooring =40 year Present market value of land = Rs.15,000/ sq. m. Present building rate = Rs.20,000/ sq. m. Developer’s profit =15% Submission Charges =1% Functional obsolescence =15% i.) What is the functional obsolescence at 15% on the replacement rate? Prevailing building rate = Present cost of construction+ Developer’s profit+ Submission charges Let Present Cost of construction = X = X+ 0.15X+ 0.01X=1.16X Present Cost of construction= 20,000/1.16= Rs.17,241/ Cost of construction = 17241 = Rs.68, 96, 400/ Functional obsolescence = 0.156896400=Rs.10, 34,460/ Hence the answer is (a) ii. What is the physical obsolescence with 10% salvage value? Replacement Cost = 20,000 Age of building in 1995 =20 year Salvage value =10% Total Depreciation %age =
4 = =45%=0.45 Physical Obsolescence of the bldg. = Total Depreciation =0.45 Hence the answer is (c) iii. What is the net depreciated value of the building? Replacement Cost = Functional obsolescence = Rs.10, 34,460/ Physical Obsolescence = Rs.36, 00,000/ Net depreciated value of the building = Rs.33,65, 540/ Hence the answer is (b) iv. What is the total value of the property? Cost of land = Rs.15000= Rs.60,00,000/ Net depreciated value of the building = Rs.33,65, 540/ Total value of the property = Rs.93, 65, 540/ Hence the answer is (d) v. What is the physical depreciation with 10% salvage, after allowing 15% for functional obsolescence with 1% submission charges. Present cost of construction = Rs.17, 241/ Cost of construction = 17241 = Rs.68, 96, 400/ Functional obsolescence = Rs.10,34,660/ Physical Depreciation after allowing functional obsolescence = ) = Rs.31, 03, 380/ Hence the answer is (b) Case Study 4: (Cost approach) An Ancient Architectural Palatial bungalow of 80-year-old is located on a commercial street in a metro city is converted into Govt. Museum after making full renovation & retrofitting of the palace by investing the cost of Rs. 120 lakh. The palace is restrengthened & fully renovated to serve the purpose of Museum. The building is in normal condition. MCQ’s i. This type of building is treated as a. Monument b. Heritage bldg. c. Historic bldg. d. Ancient building ii. What is the type of obsolescence due to its locational aspect in this case? a. Technological b. Functional c. Economical d. Physical iii. What type of obsolescence is rectified by Govt. in this case? a. Technological b. Functional c. Economical d. Physical iv. Does the obsolescence rectified by Govt. is a. Curable b. Cost to cure is reasonable c. less cost to cure d. Over cost to cure v. Instead of converting into museum, what alternate usage could have beneficial to the govt. to economically achieve the highest & best use of the building? a. Star Hotel b. Guest House c. Library d. Govt. Office