Question

Explain why the best value is the replacement cost instead of lost income when evaluating the worth of information asset to the organization. Why is the replacement cost more important than loss of income?

Answer 1

Best value for evaluating the worth of information asset to organisation depends on the type of organisation and information asset it uses. If organisation uses machines which are very costly. This machine are costly possibly because non availability of it's spare parts. Thus in situation of breakdown organisation need to change the asset. In such case Replacement cost is beneficial. On other hand if asset are such that it creates lot of revenues for organistion then lost income method is beneficial