A majority of businesses depend on modern equipment to produce their products. The equipment helps in making production, logistics easy and fast. It is important to keep such useful equipment well maintained. These equipment are real assets of any business. The equipment should be properly valued. However, it is not easy to appraise the equipment. It requires help from certified equipment appraisers to know the value of the equipment.
Why Appraise Your Equipment?
There are various reasons for companies to know the value of the machinery. Since they are valuable assets of the company they help in times of:
- Mergers and acquisitions
- Filing bankruptcy
- Obtaining loans
- Filing taxes
- Selling the machinery
The value of machinery is essential to assess the worth of the business.
Various kinds of Appraisal Reports
Businesses currently accept two types of appraisals as per the Uniform Standards of Professional Appraisal Practice or USPAP.
1. Complete Appraisal Reports - It contains all the information about the equipment, it's market value, the condition of the equipment, salvage value, number of years if operation, etc. It is one of the most common kind of appraisal.
2. Restricted Appraisal Reports - It's an in-house report which can be used for internal purposes. This report is prepared when the client and the user of the appraisal report are the same. The report should not be used for external purposes.
Certified Machinery Appraisal Process
It’s a systematic process where the equipment is assessed diligently considering every piece of information.
1. Appraisers gather all the information about the equipment. They heck its make, model, year of purchase, it's condition, it's serial number, chassis number, the number of years it has been in operation, some repairs it has undergone, the upgrades carried out to the machinery, etc. They gather as much information about the equipment or machinery as possible to provide an accurate assessment.
2. A certified machinery appraiser maintains complete secrecy, and may not inform the client in advance while preparing the appraisal report. The appraiser gives time to the client to provide all the documents required to prepare the assessment report.
3. After all the information is gathered; the certified equipment appraiser will assess the value and write the report certifying the report. The appraiser should be neutral and not biased. He should use the fair and transparent process of assessing the equipment.
It is always good to choose knowledgeable appraisers with sufficient experience and good track record. It helps business to have the right value of their machinery. The correct value can increase the worth of the firm. Even if the value is low, a proper appraisal will help business to take steps to enhance the value of their business by having right machinery and equipment.
The author of this article is a certified equipment appraiser who has extensive experience in appraising machinery. You can know more about the importance of hiring a qualified appraiser for your business at MCS.