Intangible Asset Valuation

Cost Approach

valuation_cost_approach

Read-onlyIdempotent

Apply cost approach to value intangible assets by computing depreciated reproduction or replacement cost less obsolescence. Use when income or market evidence is absent.

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; other parameters are method-dependent, so supply those named for the selected method and omit the rest (documented defaults apply where defined). Pure arithmetic: no I/O and no external calls, and numeric results are returned rounded to 2 decimals. Parameters belonging to other methods of this tool are accepted and ignored. Supplying an unknown method, or leaving unset a parameter that the chosen method requires, 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).
`formula_reference`	No	Mathematical formula or reference applied.

Schema Changelog

Changes observed during successful MCP inspections.

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

A4.9/5.0

Behavior5/5

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

Annotations already declare read-only, idempotent, non-destructive, closed-world behavior, but the description adds substantial context beyond them: method-dependent parameter requirements, how obsolescence_factors are summed and applied, defaults for omitted parameters, acceptance and ignoring of other methods' parameters, no I/O or external calls, rounding to 2 decimals, and error behavior for unknown or missing required parameters. This is rich, specific disclosure.

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

Conciseness5/5

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

The description is long but front-loaded and every sentence carries necessary information: purpose, method routing, usage guidance, alternatives, per-method parameter rules, arithmetic behavior, and error handling. No filler or repetition.

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?

Given an output schema exists, the description need not explain return values, but it still adds helpful computation details (rounding, no I/O) and error behavior. Combined with the rich schema and annotations, an agent has everything needed to invoke the tool correctly.

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 description coverage is 100%, so the schema already documents each parameter's meaning. The description adds significant conditional semantics beyond the schema: which parameters are required per method, that obsolescence_factors are decimals summed and applied to the cost base (omitting them means no obsolescence), and that parameters for unselected methods are accepted but ignored. That conditional guidance is valuable, though it does not add deep syntax beyond the schema.

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 valuation method and distinguishes it from siblings by naming valuation_income_methods and valuation_market_approach. An agent can tell exactly what this tool computes without opening any schema.

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?

Provides explicit when-to-use guidance ('no income or market evidence exists, or to corroborate income and market indications') and routes to the alternative tools for income and market indications. 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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