Under the Cost Method, a valuer estimates the fair value of a business, part of a business enterprise, security, or an intangible asset by approximating its depreciated replacement cost, which would include all costs necessary to construct a similar asset of equivalent utility at prices applicable at the time of reconstruction. The cost method is based on the premise that a prudent third-party purchaser would pay no more for an asset than its replacement cost. The cost method does not typically work well for the valuation of an intangible asset because the replacement cost of an intangible asset is difficult to estimate.