Value State Determination Module (VSDM)

Architecture Ecosystem: Structured Reality Standards™
Architecture Family: VFM® — Value Flow Mechanisms Architecture
Parent Standard: Value State Standard (VSS)
Module: VSDM — Value State Determination Module
Operational Layer: Value State Determination Layer
Category: Governance & Enforcement
Subcategory: Value Lifecycle Governance
Type: Core Module
Governed Space: Value State Determination
Origin ID: VFM-VSS-VSDM-005.3
Version: 1.0
Status: Canonical · Open Standard
Effective Date: 25 August 2026
Compatibility: OOF® Methodology OS™ · GOA™ · ORA™ · VALIDOS® · INTEGROS® · ADIT® · AGA™ · OBIDENITY®
AI-Readable: Yes
Authority: OOF®
Protection: MIP® — Methodology Intellectual Property Protection
Canonical Language: UCL — Universal Canonical Language

Canonical Definition

Value State Determination Module (VSDM) is the third Core Module of the Value State Standard (VSS) within VFM® — Value Flow Mechanisms Architecture.

VSDM governs the formal determination of the current governed Value State by evaluating whether a classified Value State Candidate is sufficiently supported, contextually bounded, temporally applicable, and methodologically coherent to become the authoritative state representation of the governed value at the defined reference point.

The Module transforms:

Classified Value State Candidate → Governed Value State Determination

VSDM establishes the point at which a classification ceases to be merely a candidate interpretation and becomes the governed current state used by downstream VFM® processes.

Its foundational distinction is:

Classification ≠ Determination

A value condition may be identified.

It may be classified.

But it must not become the authoritative governed Value State until the basis for that determination is established.

Architectural Position

VSDM is the third module within VSS.

It follows:

VSIM — Value State Identification Module

→ VSCM — Value State Classification Module

and precedes:

VSTM — Value State Transition Readiness Module.

The internal logic is:

Identify the current condition → Classify the condition → Determine the governed Value State → Assess readiness for subsequent state transition

VSDM therefore represents the formal determination gate within Value State governance.

Internal Module Flow

Classified Value State Candidate → Determination Context Confirmation → Classification Basis Review → Supporting Basis Assessment → Contradiction Review → Uncertainty Review → Temporal Applicability Review → Determination Threshold Assessment → Value State Determination → Determination Status Assignment → VSTM — Value State Transition Readiness Module

Operational Space

VSDM governs the methodological space between:

a classified value condition

and

an authoritative governed Value State.

Its operational space includes:

determination object; determination context; classification basis review; supporting basis; determination criteria;

determination thresholds; contextual applicability; temporal applicability; contradictory information; uncertainty; determination confidence where used; determination limitations; provisional determination; conditional determination; confirmed determination; indeterminate state; determination suspension; determination withdrawal; determination traceability.

Determination Object

Every VSDM process must identify exactly what is being determined.

The determination object should preserve, where applicable:

Governed Value

Value-Bearing Object

Beneficiary

Value Context

Reference Framework

Reference Point

Observed Condition

Value-State Classification

This prevents a state determination from becoming detached from the value relationship that gives it meaning.

Determination Basis

A Value State Determination must have an identifiable basis.

The basis may include:

VSIM identification records; VSCM classification records; operational information; technical condition; financial information; utilization information; capability information; market information; contractual information; dependency status; resource information; system telemetry; governed observations; relevant external assessments; other context-appropriate information.

VSDM does not require every value type to use the same evidence structure.

It requires the basis to be sufficient for the determination being made.

Determination Threshold

Organizations implementing VSDM should establish the threshold required before a classified candidate becomes a governed Value State.

The threshold may depend upon:

importance of the value; consequence of incorrect determination; operational significance; financial significance; strategic significance; reversibility; uncertainty; available information; decision context.

A low-consequence internal resource may require a relatively simple determination basis.

A value state affecting:

major financing; public infrastructure; critical industrial capacity; investment; mission capability; systemic financial exposure; strategic assets

may require substantially stronger support.

VSDM therefore permits proportional determination governance.

Determination Status

A VSDM implementation may use explicit determination statuses.

1. Indeterminate

Available information does not support a sufficiently grounded determination.

2. Provisional

A state can be determined temporarily, but material uncertainty or missing information remains.

3. Conditional

The determination remains valid only while explicitly defined conditions remain satisfied.

4. Determined

The applicable determination threshold has been satisfied and the classified state becomes the governed current Value State.

5. Suspended

A previously determined state can no longer be relied upon pending reassessment.

6. Withdrawn

The previous determination has ceased to represent the governed current state.

These statuses prevent a binary system from forcing:

determined

or

not determined

where reality is more complex.

Value Asset™ Determination

Where the classified value condition satisfies the applicable determination requirements, VSDM may establish a governed state corresponding to:

Value Asset™

A Value Asset™ represents value that exists and occupies a positively governed value state within the applicable context.

The determination remains tied to:

what value

for whom

in what context

at what reference point

under what conditions

has been determined.

The existence of a Value Asset™ under VFM® does not automatically establish:

legal ownership; accounting recognition; market price; tax treatment; regulatory classification; transferability.

Those questions remain governed by their appropriate systems.

ZVA™ — Zero Value Asset™ Determination

VSDM provides the formal determination gate for:

ZVA™ — Zero Value Asset™

A value-bearing object must not become a governed ZVA™ merely because it is:

unused; old; unprofitable; written down; technologically outdated;

temporarily inaccessible; non-revenue-producing; operationally inactive.

The determination must establish that the governed value has reached a zero-value state within the defined context and reference point.

The canonical logic is:

Value-Bearing Object Exists → Relevant Value Context Identified → Current Condition Identified → Zero-Value Classification Candidate → Determination Basis Assessed → Zero-Value State Determined → ZVA™

Therefore:

ZVA™ ≠ Object Non-Existence

and:

ZVA™ ≠ Universal Worthlessness

Zero-State Determination Protection

Because a zero-value determination may trigger significant downstream consequences, VSDM must protect against false zero states.

A zero determination should examine whether relevant value remains through:

another current use; backup function; strategic capability; recoverability; transferability; component value; knowledge value; data value; contingency value; alternative beneficiary; alternative context; future defined use where relevant to the governed context.

This does not mean every hypothetical future possibility prevents a zero-value determination.

It means material existing value must not be ignored merely because the primary use has disappeared.

Unknown ≠ Zero

VSDM preserves one of the most important VSS rules:

Insufficient Information ≠ Zero Value

If the organization cannot establish whether value exists, the appropriate state may be:

Indeterminate

rather than:

ZVA™

This prevents missing information from becoming a mechanism for manufacturing zero-value determinations.

Dormant ≠ Zero

A dormant asset may currently generate no operational output.

Yet its governed value may remain intact.

Examples include:

emergency infrastructure; reserve production capacity; backup computing systems; strategic inventories; unused intellectual property; contingency equipment; inactive but recoverable capabilities.

VSDM must therefore distinguish:

no current utilization

from

no current value.

Recoverable ≠ Zero

A capability that has temporarily lost its ability to generate value may remain recoverable.

For example:

Machine unavailable because one replaceable component failed

is fundamentally different from:

Machine incapable of producing value within the governed context and with no materially relevant recovery pathway.

The first may support a:

Recoverable Value State

rather than a ZVA™ determination.

Negative Value Determination

Where the applicable VFM® implementation governs negative-value states, VSDM must distinguish:

Zero Value

from

Negative Value.

A value-bearing object may impose more burden than the value it produces through:

maintenance; energy; storage; compliance; capital lock-up; operational complexity; environmental burden;

risk exposure; disposal obligation.

That condition must not be hidden inside a zero-value classification where the distinction is materially relevant.

Multi-Context Determination

The same object may receive multiple valid Value State Determinations simultaneously.

For example:

Legacy Data Center

may be determined as:

Degraded Value — Primary Computing Context

Active Value — Backup Capacity Context

Conditional Value — Resale Context

Strategic Value — Business Continuity Context

The determinations are not contradictory where they govern different value relationships.

Therefore:

One Object ≠ One Universal Value State

Multi-Beneficiary Determination

Value may also differ by beneficiary.

A manufacturing tool may have zero production value to one company while carrying active production value to another.

An abandoned technology may have low value to its developer while carrying significant research value to a university.

VSDM must preserve the beneficiary relationship where it materially affects the determination.

Temporal Determination

Every Value State Determination exists relative to a reference point.

A determined state is therefore not automatically permanent.

The same governed value may move through:

Active Value

→ Degraded Value

→ Zero Value

→ Recoverable Value

→ Active Value

as circumstances change.

VSDM determines the current state.

It does not freeze value into that state indefinitely.

State Determination ≠ State Transition

VSDM determines:

what state value currently occupies.

It does not govern:

the mechanism by which value moved into that state.

That distinction is fundamental.

The fact that a machine is currently in a degraded-value state does not require VSDM to govern the technical event that damaged the machine.

Likewise, determining that a digital asset has reached zero value does not require VSDM to govern the external market, legal, technological, or operational event responsible for the change.

Those external mechanisms remain outside the VSDM governed space.

Determination Contradiction

Material contradictory information must be addressed before a final determination where it could alter the result.

For example:

Operations: capability is obsolete.

Engineering: capability remains technically deployable.

Finance: asset is fully depreciated.

Strategy: capability remains essential during transition.

VSDM should first determine whether these statements concern:

the same governed value

or

different value contexts.

Only genuine contradictions within the same governed value relationship require reconciliation at the determination level.

Determination Uncertainty

Uncertainty must remain visible where it materially affects the state determination.

VSDM may preserve uncertainty relating to:

future usability; current capability; dependency availability; market relevance; recoverability; strategic importance; technological condition; beneficiary relevance; data completeness; reference-point accuracy.

A determination may remain provisional or conditional where uncertainty does not justify a fully determined state.

Determination Expiry

A Value State Determination may require expiry or review where the value environment changes rapidly.

An implementation may define:

Review Date

Validity Period

Material Change Trigger

Reassessment Trigger

Examples include:

new market conditions; new technology; restoration; deterioration; regulatory change; beneficiary change; operational reconfiguration; dependency restoration; dependency failure; new evidence.

A determination that no longer represents the governed reality must not remain authoritative merely because it exists in a record.

Determination Authority

Organizations should identify who or what may issue a Value State Determination.

Depending upon context, this may involve:

authorized personnel; defined governance function; automated rules; AI-supported assessment; committee decision; system-generated determination; hybrid human-machine process.

VSDM governs the determination structure.

Where authority, responsibility, accountability, or delegation itself requires governance, the appropriate governance architecture remains responsible for those questions.

Automated Value State Determination

VSDM can operate in automated environments.

A system may continuously receive:

Operational Data

→ Current Condition

→ State Classification

→ Determination Assessment

→ Current Governed Value State

This enables value-state governance to move beyond periodic static reporting.

However, automated determination must preserve:

criteria; reference context; input basis; uncertainty; determination logic; determination timestamp; applicable limitations; state history.

Automation must not turn a contextual Value State into an unexplained label.

Determination Traceability

A governed Value State should be traceable backward through the VSS process.

The minimum chain is:

Governed Value State

→ Determination Basis

→ State Classification

→ State Candidate

→ Observed Condition

→ Reference Point

→ Value Context

→ Governed Value

This creates reconstructability of the state without requiring VFM® to take ownership of the external systems that generated the underlying information.

Determination ≠ Valuation

VSDM does not determine monetary value.

It may determine:

Active Value

Dormant Value

Degraded Value

Zero Value

or another governed state.

It does not automatically determine:

CHF 4.7 million

or another monetary amount.

Therefore:

Value State Determination ≠ Monetary Valuation

A valuation methodology may use the determined state as an input.

Determination ≠ Accounting Recognition

A VSDM determination does not replace accounting standards.

An asset may remain recognized in financial accounts while VSDM determines that its operational value has reached zero within a particular context.

Conversely, an organizational capability may have no separately recognized accounting asset while carrying an active strategic Value State.

This is precisely why the two governance spaces must remain separate.

Determination ≠ Tax Treatment

A governed Value State does not itself establish tax liability, deductibility, taxable value, depreciation treatment, or tax recognition.

However, a future tax architecture may consume VFM® Value State Determinations as governed inputs where legislation or policy chooses to recognize value-state information.

The boundary remains:

VFM® determines the governed Value State.

The tax system determines the legal tax consequence.

Minimum Implementation Framework

A minimum VSDM implementation should establish:

1. Classified Candidate Input

Receive the classified Value State Candidate from VSCM.

2. Determination Context

Confirm governed value, object, beneficiary, context, and reference point.

3. Determination Criteria

Define what must be established before the classified state may become authoritative.

4. Supporting Basis Review

Review the information supporting the classified state.

5. Contradiction Review

Identify material conflicting information capable of changing the determination.

6. Uncertainty Review

Identify material uncertainty affecting determination legitimacy.

7. Determination Threshold Assessment

Determine whether the required threshold has been satisfied.

8. Value State Determination

Issue the applicable Value State or preserve an indeterminate, provisional, conditional, suspended, or withdrawn status.

9. Determination Conditions

Record material limitations, validity periods, conditions, or review triggers.

10. Determination Record

Create the governed determination basis for transfer to VSTM.

Governance Outputs

VSDM may produce:

Value State Determination Value State Determination Status Value State Determination Basis Value State Determination Criteria Record Value State Determination Threshold Record Value State Determination Uncertainty Record Value State Contradiction Record Value State Applicability Statement Value State Validity Period Value State Review Trigger Value Asset™ Determination ZVA™ Determination Value State Determination Record

These outputs provide the governed basis for:

VSTM — Value State Transition Readiness Module.

Use Case 1 — Public Finance and Infrastructure:

Determining Which Assets Still Carry

Operational Value

A government or public infrastructure operator may control thousands of:

buildings; roads; facilities; machines; IT systems; land parcels; equipment; licenses; infrastructure components.

Traditional asset registers can establish that these objects exist and may assign accounting amounts to them.

But they do not necessarily establish the current operational state of the value attached to each object.

VSDM allows the organization to formally determine, within defined contexts:

Active Value

Dormant Value

Constrained Value

Degraded Value

Recoverable Value

ZVA™ — Zero Value Asset™

Consider an unused public building.

Its non-use does not automatically establish zero value.

The building may retain:

Emergency Capacity Value

Alternative Public-Service Value

Rental Value

Redevelopment Value

or

Strategic Land Value.

VSDM prevents a simplistic:

unused → zero value

determination.

But where the relevant value contexts have been examined and the applicable determination threshold establishes that a specific governed value has genuinely reached zero, the organization can create an explicit ZVA™ determination.

Across a large public asset base, this creates the possibility of identifying where resources remain tied to value-bearing objects whose governed value state no longer justifies their continued treatment as productive capacity.

The result can support better:

asset management, capital allocation, maintenance prioritization, infrastructure renewal, reuse analysis, and public spending discipline.

Use Case 2 — AI and Data-Center Infrastructure:

Determining When Computing Capacity Stops

Creating Useful Value

An organization operates a large AI infrastructure environment containing:

GPUs; servers; storage; models; software licenses; datasets; networking capacity; specialized accelerators;

legacy computing systems.

Physical and accounting existence alone does not reveal whether each resource continues to create useful value.

A GPU cluster may remain technically operational while its energy cost, performance profile, software compatibility, workload suitability, or infrastructure requirements make it unsuitable for the governed workload.

Another older cluster may appear obsolete for frontier-model training but remain highly valuable for inference, testing, simulation, or lower-complexity workloads.

VSDM can determine separate states by context:

Cluster A → Active Value — Frontier Training

Cluster B → Zero Value — Frontier Training but → Active Value — Batch Inference

Cluster C → Recoverable Value — Current Workload

Cluster D → Negative Value Candidate — Legacy Infrastructure Context

This prevents organizations from making the expensive mistake of equating:

technological age

with

zero value.

It also prevents the opposite mistake:

physical availability

with

continued productive value.

At infrastructure scale, VSDM can provide a governed state layer showing where computing, energy, capital, cooling, maintenance, and physical space remain attached to resources that no longer create sufficient value within their intended context.

That state information can subsequently support VFM® value-change and transition governance and other architectures concerned with resource allocation, efficiency, investment, or operational optimization.

Foundational Principles

Classification is not determination.

A Value State becomes authoritative only through an explicit determination basis.

Value State Determination must remain bound to value context, beneficiary, and reference point.

Unknown value is not zero value.

Dormant value is not zero value.

Recoverable value is not zero value.

Zero value is not negative value.

Zero value does not mean non-existence.

Zero value in one context does not establish zero value in every context.

One object may legitimately carry multiple Value State Determinations.

A Value State Determination is not monetary valuation.

A Value State Determination is not accounting recognition.

A Value State Determination is not tax treatment.

The current Value State must remain revisable when the reality supporting it materially changes.

Canonical Closing Statement

Value State Determination Module establishes the formal determination gate of the Value State Standard by transforming a classified Value State Candidate into an explicit, context-bound, reference-point-specific, supportable, uncertainty-aware, and reviewable governed Value State. Through governance of determination criteria, supporting basis, thresholds, contradictions, uncertainty, applicability, determination status, temporal validity, authority, traceability, Value Asset™ determination, and ZVA™ — Zero Value Asset™ determination, VSDM prevents classifications, accounting records, physical existence, non-use, technological age, missing information, or assumptions of worthlessness from becoming authoritative statements about the current state of value without a governed basis. By separating Value State Determination from monetary valuation, accounting recognition, tax treatment, external causation, and state transition, VSDM establishes the authoritative current- state layer required before VFM® can determine whether value is ready to move into another governed state.

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