Imputed Value

What is Imputed Value?

Also called as estimated imputation, imputed value is regarded as an assumed value that is provided to an item when the real value is unknown or unavailable. Basically, the concept of imputed value is logical for a time set or an item, wherein the real value has to be ascertained.

With this value, best guess estimation can be executed to precisely evaluate a large set of data points or a series of values. Not just that, but imputed values can also help pertain to the intangible assets’ value that a company owns, the Opportunity Cost linked to a specific event or for finding out the value of a historical item for which the facts regarding the value at the past time is not available.

Understanding Imputed Value

In a way, imputed values can easily be used in different situations. As mentioned above, these could be the opportunity cost of an event, intangible assets by a firm, or the value of a historical item. Along with that, data points in time series data may need estimates to complete a comprehensive Range of figures.

Thus, as long as imputed values are the fair estimates, there will be no major issues when it comes to using them.

Examples of Imputed Value

Let’s take an imputed value example here. Suppose a company, called ABC, chooses to invest in project Y and not project Z. This choice will have an opportunity cost linked with it. The real cost assigned to the opportunity cost will be the imputed value, considering that it is quite impossible to find out the real amount of the opportunity cost only by measuring the same.

In another example, imagine a company called ABC, has a specific patent. Now, the value of this patent will be the imputed cost. It can easily be evaluated how much extra revenue or business has the company got by owning this patent and how much the company’s value has increased. However, it will not be possible to evaluate the definite value.