Fair value of non-rivalrous free communal good: concept, estimation, and applications
2020
Jaunzeme, J.S., Ventspils Univ. of Applied Sciences (Latvia)
At the centre of the current research lies the concept of assets’ and liabilities’ fair value, what is encountered in the International Public Sector Accounting Standards (IPSAS – in abbreviation). According to IPSAS, fair value is an alternative measurement base for property, plant and equipment and intangible assets. In the opinion of the author, the fair value concept in IPSAS is considered from too narrow point of view, since the concept of fair value is insufficiently associated with the asset’s value concept used in the economic theory, financial theory, and econometrics. This paper is the part of the research “Holistic approach to the fair value concept and estimation” provided by author. The purpose of this paper is to adopt the fair value concept defined in the IPSAS to the non-rivalrous free communal goods, which are financed by municipalities and government institutions from taxpayers’ money, and to develop a practically applicable and algorithmized non-rivalrous free communal goods’ fair value estimation method based on technological, economical, financial, and social surveys. Practically oriented research about non-rivalrous free communal goods’ fair value estimation the author has never encountered in scientific literature available for the author – neither scientific papers in the field of accounting, nor in the field of economics. The theoretical concepts are illustrated with help of examples from empirical material which is borrowed from some published articles. The measurement of non-rivalrous free communal goods’ fair value is an urgent issue because the Latvia’s State Audit Office reported on inexpedient and economically unsubstantiated investments in non-rivalrous communal goods. The results of the current research have to be implemented in the state and municipal government authorities’ practical decision making process to a range of investment projects for production of non-rivalrous free communal assets.
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