Marking to model using a value estimated using a financial model as the book value of assets or liabilities. Marking to model is often uncertain, and is easily manipulated, so it is (or should be) used as a last resort where neither historical cost nor mark to market can be used.
The model used is usually some sort of NPV, and is therefore subject too all the uncertainties involved in estimating suitable parameters for any DCF. In addition accurately quantifying the benefits of ownership of some assets is difficult.
The uncertain nature and susceptibility to manipulation of mark to model had made it controversial. Some opponents of its use refer to it as “mark to make believe” or “mark to fantasy”.
Although most uses of mark to model (e.g. for financial instruments) is a recent innovation, it has been used in the past: for example, to put brands on the balance sheet (which has largely turned out to be a useless exercise).