The computer program would provide the fair value to market participants through its use with other assets as the program works with other assets in the manufacturing process. Hence, the in-use valuation premise is appropriate for this asset while the highest and best use for the asset is its current use within the manufacturing process.
The market valuation approach of fair value:
The market valuation approach of fair value would not be applicable if the software program is unique. Use of the market valuation approach would require the existence of comparable software assets.
The income approach could be applied in fair value with a present value technique being used. The cash flows used in this technique would be based on the income stream expected to result from the use of the computer program over its economic life. This may be determined by considering what market participants would pay as a license fee to be able to use the computer program in their businesses.
The cost approach could also be used in fair value. This approach would require the estimation of what it would cost currently to construct a substitute computer program that would perform the same tasks as the program being valued. A difficulty in this process could arise if some of the components of the program are unique and difficult to replicate by another market participant.