The China Appraisal Society ("CAS") has recently issued the Standards of Practice for Asset Appraisals: Asset Appraisal Approaches (the "Standards"), with effect from March 1, 2020.
The Standards contain 25 articles divided into six chapters which are general provisions, market approach, income approach, cost approach, selection of appraisal approaches, and supplementary provisions. The main contents of the Standards are as below. The first is specifying the purpose and basis of these Standards, definition and types of appraisal approaches, and the scope of application of these Standards. The second is defining three basic asset appraisal approaches respectively, namely the market approach, the income approach and the cost approach, setting out the prerequisite for application of each approach and the matters that require close attention, and outlining the specific methods for each basic approach. The third is providing for the considerations for selection of an appraisal approach, general provisions regarding selection of an appraisal approach, special circumstances in which one appraisal approach is adopted, and the disclosure requirement in respect of selection of an appraisal approach. Among others, the Standards stipulate that where the conditions for adopting different appraisal approaches are met, the specialized asset appraisers shall select two or more appraisal approaches, and form reasonable appraisal conclusions after a comprehensive analysis.