Methods of Valuation: Computed Value

Welcome back to our series on "Methods of Valuation." Last week we discussed “Deductive Value.” This week we will look at Computed Value and Derived Value.

Computed Value
Computed value is the fifth method of valuation. If it is inappropriate to use any of the other methods, then computed value must be used. Computed value combines the value of the materials and other components of the imported merchandise in order to arrive at a value.

The computed value of imported merchandise is the sum of:

• Cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise (cost will not include taxes if the tax is refunded upon exportation);

• An amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by the producer in the country of exportation (Based on the producer's profit and general expenses, unless the producer's profit and general expenses are inconsistent with the usual sales of merchandise of the same class or kind.);

• Any assist, if its value is not included above; and

• Packing costs.

Note:
Computed value may be used before deductive value if requested by the importer and approved by CBP. This election must be made at the time of entry. For an example, read ruling HQ 546735.

Example 1:
General expenses include items that are not allocatable to the production of goods such as:

• Administrative salaries
• Casualty and liability insurance
• Advertising costs
• Salesman's commissions and expenses

Example 2:
Computed value includes the amount equal to the apportioned value of any assists used in the production of the imported merchandise. The value of any engineering, development, artwork, design work and plans and sketches undertaken in the United States will be included in computed value only to the extent that their value has been charged to the producer.


Derived Value
Derived value, also known as the “fallback” method, is the sixth and final method of valuation. If all other methods are inappropriate, then derived value must be used. Derived value determines the dutiable value using a combination of the other five methods, and allows for the value to be "reasonably adjusted to the extent necessary."

Next week, we will complete this series on Methods of Valuation by presenting Prohibited Methods of Valuation.