What Is Involved in Equipment Valuation?

In today’s technologically developed world, where business is highly competitive, it is very important for companies to conduct fast and cost effective equipment valuation procedures. In a hypothetical company, the appraisal work is done by its certified specialized engineers. This type of evaluation can be done on single pieces of equipment such as household items, machinery, computer and internet tech, various vehicles and many other things. Valuation can also be used in the assessment of a whole product line, operating systems and facilities, for example.

The purpose of equipment valuations can be different. They range from financing, accounting, tax, leasing, bankruptcy, and literally dozens of other purposes. On the evaluation date, medical equipment, for example, receives a determination of its value, supported with the reasons and opinion of the specialized evaluator. This is a matter of high importance for all kinds of production companies especially nowadays, when everybody is looking for the next best thing on the market.

The overall process of equipment valuation in any finance area includes identifying the object of assessment, stating the purpose of the appraisal, setting the date, looking into the valuation concepts, determining the type of valuation to be done, doing a report and checking for the availability of additional information. Most commonly, a valuation consists of determining the fair market value in a case of continued use, or the orderly liquidation and auction value. Other typical concepts of valuations are defining the salvage and scrap values, to name a few. In the US, these are defined by the American Society of Appraisers.

The availability of enough data is one of the most important steps in an equipment valuation. It is vital for determining the cost and timing. The information that is usually required for an appraisal to take place includes asset listings, maintenance logs, purchase orders and financial statements. There are three stages of equipment valuation: inventory, site inspection and desktop. There is the same number of reports for equipment appraisals. They are generally divided into a Self-contained, Summary and Restricted use reports, the core difference being in the overall content and level of detail used in each one. To sum it all up, these were only some of the basics of equipment valuation, which in the contemporary business world is certainly a must for any type of company aimed at production.