What is the method of assessing personal property based on its cost?

The method of assessing personal property based on its cost is known as the cost approach. This approach evaluates the value of an asset by determining the cost to replace it with a similar asset, considering factors such as depreciation and obsolescence. It focuses on the expenses incurred in acquiring or producing the property, making it particularly useful for valuing unique personal property that may not have a readily available market.

In the cost approach, assessors start by estimating the cost of new or comparable property and then make adjustments for depreciation, which accounts for wear and tear or loss of value over time. This method is especially beneficial for assessing personal property like machinery, equipment, and other assets where market data may be limited or unavailable.

The other methods, while relevant in different contexts, do not focus primarily on cost. The market approach relies on analyzing recent sales of similar properties to derive value, while the income approach calculates value based on the expected income that the property can generate. The residual approach is typically used in development and land valuation scenarios rather than in assessing personal property directly. This context highlights the unique utility of the cost approach in determining the value of personal property.