A Case of Valuation and Learned Cognitive Dissonance.

Abstract This article focuses on valuation of taxes to be paid by companies. There are three appraisals to be considered by the company, they range from 9. 4 to 11. 9 million and the 2. 5 million deviation is unfortunate and sufficient cause of concern. Compare these to the possibilities for recorded cost. The company used an amortization method that resulted in a zero book value. If it had used Internal Revenue Service guidelines it would have 11. 5 million book value, and if it purchases the plant as agreed it will have 1. 7 million book value. The deviation of 11. 5 million is about five times as large or twice as large as the appraisal deviations. Second, there is the concern over the number of different appraisals with the implication. Initial construction costs are subject to various methods of accumulation which are subject to various methods of cost collection, and so forth until one get back to the cash expended or a fair market value at some past time or some other value. Thus, the initial cost is subject to variation. Finally, there is the objective and verifiable notion. The accountant takes a set of figures which he freely admits are subjective, arranges them in an equation, and then calculates a figure that he considers to be objective.