At present, asset valuation of non-toll roads is one of the important technical tasks for highway administrations at all levels to meet the Chinese government’s accounting standards and carry out management and initial measurement of the book value of existing stock of highway infrastructure assets. This paper studies the application of depreciated replacement cost in asset valuation of non-toll roads, and discusses the applicability and limitations of key physical depreciation methods used worldwide. Based on the actual needs of the initial value measurement of the non-toll road assets and the road maintenance and management, the correlation between the pavement asset value and pavement performance is established. Combined with the asset value measurement of non-toll roads under the administration of Yunnan Highway Bureau, the proposed method of physical depreciation based on pavement performance is verified, which provides new perspectives for asset management and maintenance budget management of non-toll roads. keywords: Non-toll Roads; Asset Valuation; Depreciated Replacement Cost; Physical Depreciation; Transportation Asset Management

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