Intangible Asset Valuation

Cost Approach

valuation_cost_approach

Read-onlyIdempotent

Calculate depreciated reproduction or replacement cost for intangible assets when income or market evidence is unavailable, applying obsolescence to corroborate value indications.

Instructions

Cost approach: depreciated reproduction cost from a cost breakdown and depreciated replacement cost with equivalent utility, both reduced by obsolescence. Method selects the formula. Use when no income or market evidence exists, or to corroborate income and market indications for internally developed intangibles. For income-based indications use valuation_income_methods; for market evidence use valuation_market_approach. Per method: reproduction_cost needs development_costs (optional: obsolescence_factors); replacement_cost needs current_cost (optional: obsolescence_factors). obsolescence_factors values are decimals that are summed and applied to the cost base; omit them for no obsolescence. Only method is required; all other parameters are method-dependent — supply those the selected method names and omit the rest (defaults apply where defined). Rates and premiums are decimals (0.10 = 10%). Pure arithmetic: no I/O and no external calls, rounded to 2 decimals; parameters belonging to other methods are accepted and ignored. An unknown method, or a missing method-required parameter, returns an error instead of a value.

Input Schema

TableJSON Schema

Name	Required	Description
`method`	Yes	Formula to apply. Options: reproduction_cost = Sum of cost categories less total obsolescence.; replacement_cost = Current cost of equivalent utility less obsolescence.
`current_cost`	No	Current cost to replace the asset with equivalent utility, in currency units.
`development_costs`	No	Cost breakdown by category, e.g. {"r_and_d": 1000000, "testing": 250000}, in currency units.
`obsolescence_factors`	No	Obsolescence factors, e.g. {"functional": 0.10, "technological": 0.15, "economic": 0.05}.

Output Schema

TableJSON Schema

Name	Required	Description
`error`	No	Error message when the call fails.
`steps`	No	Intermediate calculation steps for traceability (one string per step).
`value`	Yes	Computed valuation, rate, or metric.
`method`	No	Formula / method name that produced the result.
`assumptions`	No	Modelling assumptions applied (list of strings or key/value object).
`defaults_applied`	No	Optional parameters that were not supplied, so their documented defaults were used.
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

Changed1 schema field changedv2.1.1Oct 2, 2026

addedOutput schema / properties / defaults_applied

Added value: +{
+  "description": "Optional parameters that were not supplied, so their documented defaults were used.",
+  "items": {
+    "type": "string"
+  },
+  "type": "array"
+}

Changed2 schema fields changedv0.1.4Sep 30, 2026

changedOutput schema / properties / steps / description

Previous value: -"Intermediate calculation steps for traceability."New value: +"Intermediate calculation steps for traceability (one string per step)."

removedOutput schema / properties / steps / items / type
```
Removed value: -"object"
```

First observedv0.1.0Sep 30, 2026

TDQS

A4.6/5.0

Behavior4/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

Annotations already cover the safety profile (readOnly, idempotent, no open world), and the description adds substantial context beyond them: pure arithmetic with no I/O or external calls, 2-decimal rounding, and explicit error behavior for unknown methods or missing method-required parameters. It also states that parameters belonging to other methods are accepted and ignored, which is genuinely useful non-obvious behavior.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness4/5

Is the description appropriately sized, front-loaded, and free of redundancy?

Front-loads scope and routing before the per-method mechanics, and every sentence carries operational content (alternatives, method requirements, decimal convention, error handling). It is dense and slightly long, but no sentence is filler.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness5/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

An output schema exists, so return values need not be explained. For a 4-parameter, method-branching arithmetic tool with full annotation coverage, the description supplies everything an agent needs: method selection, required vs. optional parameters per method, units/format, and failure modes.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters4/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema coverage is 100%, so the per-parameter definitions are already documented and the baseline is 3. The description goes beyond it by explaining cross-parameter semantics: which parameters each method requires, that only method is mandatory, that other-method parameters are ignored, that obsolescence_factors are summed and applied to the cost base, and that rates are decimals.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose5/5

Does the description clearly state what the tool does and how it differs from similar tools?

States a specific method family (cost approach) and names both sub-formulas — depreciated reproduction cost from a cost breakdown and depreciated replacement cost with equivalent utility — along with the obsolescence reduction. It clearly distinguishes itself from the income and market siblings by naming them.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines5/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

Gives explicit when-to-use conditions ('when no income or market evidence exists, or to corroborate income and market indications for internally developed intangibles') and routes to named alternatives (valuation_income_methods, valuation_market_approach). Nothing is left to inference.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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