Equipment Appraisal Blog | Understanding Machinery Appraisals

What Happens in a Business Dissolution or Divorce?

Posted by Equipment Appraisal Services on Mon, Aug 31, 2015 @ 10:00 AM


Whether it's retirement or a partner leaving a business, dissolution can be a very confusing process. How do you get a fair value from the assets and, in the case of a partner leaving, decide on a fair price for the leaving partner's share? Let's take a good look at the dissolution process and how having equipment appraisals completed can help make that process go more easily for all concerned.

What happens in a dissolution?

Though dissolution can be very different based on your company's structure and policies, they usually follow the same basic steps:

  1. The decision to close or leave the company is made. For a sole proprietor, this can be as simple as making a decision, but in a partnership, LLC or corporation, it can be much more complicated. A partnership may require a meeting to discuss how the leaving partner needs to hand off existing clients and be compensated for their part of the company, typically using equipment appraisers to ensure that the machine valuation reflects the proper values. An LLC or corporation often requires a meeting with the shareholders to approve a resolution to dissolve, usually by following the procedure outlined in the bylaws.
  2. File dissolution forms with the state. Depending on your state's requirements, this step may either fall at this point or after taxes have been taken care of. Usually filed as a Certificate of Dissolution, talking to your state's Secretary of State office is a good starting point to gather details on what needs to be done.
  3. Cancel any licenses, permits and fictitious names.  If you've needed to pick up any regulatory documentation, you'll want to cancel them, because you can be charged for renewals if you fail to cancel these items. Cancelling a fictitious name, such as a DBA, protects you from liability if someone else does business under that name after you've dissolved your business.
  4. File taxes.  You'll have local, state and federal taxes to file. Many states require proof that your tax burden has been finished before they'll dissolve your business, often in the form of a tax clearance of verification of good standing. Don't forget payroll deductions and sales tax returns while you're working on closing taxes.
  5. Settle creditors' claims. Any companies or agencies you owe money to should be settled prior to the dissolution. If needs be, this can be accomplished by selling some assets following a machinery and equipment appraisal by a qualified equipment appraiser.
  6. Distribute any remaining assets.  This can be the hardest one, especially if the company doesn't close, such as in a divorce or when a partner leaves, and is the best time to have a machinery valuation or machine appraisal performed. Because the company is being continued after the change, the person retaining the business will want a low equipment value because they must buy out the other partner to continue, while the individual who is leaving wants higher equipment values as they are being bought out. Bringing in a qualified machine appraiser accredited by the American Society of Appraisers using the Uniform Standards of Professional Appraisal Practice can often help solve this dilemma, because they are required to appraise the remaining assets at a fair market value that doesn't favor one side or the other, though if all parties agree, a liquidation appraisal can be used.

Closing or leaving a business through dissolution can be a difficult time for all involved, but by following the steps one at a time and using the services of a professional, such as your registered agent or a qualified appraiser, it can be much easier. Your Secretary of State, the IRS and the Small Business Administration are other alternatives for information on dissolving your business.

Tags: Equipment Appraisal, Divorce, dissolution

9 Things That Could Affect a Crane Appraisal

Posted by Equipment Appraisal Services on Fri, Aug 28, 2015 @ 08:00 AM


When you're getting ready to sell your old crane, buy a new-to-you crane or get a heavy equipment appraisal, what kind of things affect your machinery valuation? From the good to the bad and the ugly, let's take a solid look at things that can affect a crane appraisal.

Good: These Items Typically Increase Equipment Values

  • Options or kits that are approved by the manufacturer or designed based on the machine's specifications. Because the additions have either been approved by the manufacturer or are designed for that specific crane, the equipment appraiser knows this is a value-added item rather than one that can cause more problems down the road.
  • Exceptional maintenance that has been well documented. Equipment appraisers know that well-maintained machinery will typically provide excellent performance down the road and has not been abused on the job site.
  • All systems are functional and in good repair. You wouldn't buy a truck to go off-roading in if the four wheel drive wasn't working, would you? A crane appraisal needs to show any problems with the crane, including items that haven't been repaired or that are on the verge of failing.

Bad: These Items Typically Decrease Equipment Appraisals

  • Lack of maintenance logs. You might have done the work you've claimed, but can you prove it? An appraiser has to assume that proper, timely maintenance and repairs were not undertaken unless there's documented paperwork showing the work was done, even if it's only a parts store receipt because you did the maintenance in-house.
  • Welds, bends or cracks. These are signs that the crane may have structural damage and could cause serious safety issues down the road. You wouldn't buy a crane if you had to worry about a wrecking ball falling on the cab, would you?
  • Dents, badly scraped or scratched paint and other signs of abuse. Though these may not directly impact the functionality of your crane, it does show shoddy upkeep at best and terrible abuse at the worst. Paired with other problem signs, this tells an appraiser that your crane personnel weren't properly trained or were lazy or negligent in how the crane was being operated. 

Ugly: These Items can go Either Way

  • New bodywork and paint. Sure, it looks great, but what's it covering up? Unscrupulous sellers will do a quick job of cleaning up an abused crane to make it look nice, even when it's been all but torn to pieces in the field.
  • Wear that is not reflected in the number of hours on the machine or a broken meter. That crane may show 3,000 hours, but if the controls are beat up or there's wear on the outriggers that suggests much more time in the field, there's a good bet that something's not right. A broken meter is often viewed in the light of missing maintenance paperwork - not proof of guilt, but definitely suspicious.
  • Paperwork that is . . . mostly . . . clear. Whether it's a salvage title, something off with property tax receipts or similar paperwork, bad paperwork is a legal headache waiting to pound your temples together.

By knowing what a machine appraiser is looking for when completing your crane appraisal, you can easily get everything together that's needed to ensure you receive an equipment value that is fair for your crane. It also makes the process go smoothly and more quickly when you have everything that will be needed close to hand instead of buried in a random box of receipts in your office or attic.

Tags: Equipment Appraisal, equipment appraiser, crane appraisal

Why You Need a Machine Appraisal for a Bankruptcy

Posted by Equipment Appraisal Services on Wed, Aug 26, 2015 @ 08:30 AM


Long days turn into sleepless nights when the business you own is in danger of failing. The thought of filing for bankruptcy is never a pleasant one, but it is an option that must be considered. Many manufacturing companies borrow heavily to obtain the machinery and equipment that is essential to the operation of their business. When business is good and everything goes according to plan, there is no problem servicing the debt. When debt goes from manageable to something worse, you can not procrastinate. It is time to act. It is time to call in a skilled equipment appraiser and get a bankruptcy asset appraisal.

Discharging or Reorganizing Debt Requires Proof

Whether you are planning to disband your business and file for a discharge of all debts under Chapter 7, or are trying to reorganize and resurrect your troubled business through a Chapter 11 filing, you need to establish your machinery and equipment values. One of the first and most basic steps in any bankruptcy filing is to list your assets (and liabilities) and indicate their estimated worth. If the bankruptcy court does not agree that your liabilities substantially exceed your assets, your case may be dismissed.

Get a Machinery and Equipment Appraisal Before you File for Bankruptcy

Before you go to the expense of hiring an attorney and filing a case, it makes sense to know exactly where you stand. Maybe you underestimated the fair market value of your machinery and equipment? Equipment value can be the biggest asset of your company.

If you lease the equipment and machinery that you use, it is not normally recorded as an asset of your business. If the lease contains a clause that allows you to purchase the equipment or machinery at a specific time for a specific price, the lease may have some value. Here is an example of how an equipment lease can have value.

Suppose you signed a 10-year-lease for machinery that cost $200,000. Further, your lease had an option to purchase the machinery for $20,000 at the end of the lease. When the lease is up, a machine appraiser may assign a machine valuation of $50,000. If that is the case, you have an asset worth $30,000.

Even if you are still paying the bank or finance company that loaned you the money to buy your equipment and machinery, you may still own a valuable asset. The difference between what you still owe to the finance company and the fair market value is the equity you have in your machinery or equipment.

Accurate equipment or machinery valuation can reveal a large, non-cash asset that can be used to borrow cash and pay off creditors. If you can use your machinery and equipment as collateral to raise working capital, you may be able to avoid bankruptcy and get your business back on track.

Equipment Appraisals Help Attorneys do their Job

Attorneys that practice bankruptcy law have a number or responsibilities that require an accurate estimate of a machine or piece of equipment's worth. Before you actually file a case they need to know all of your company's assets and liabilities so they can advise you whether or not it is prudent to pursue relief through the courts. Then, they have to prepare documentation (attach a machinery and equipment appraisal) for the court to review.

Business bankruptcies can be complicated and it always pays to be well prepared with facts an figures. Part of that preparation is getting your machinery and equipment professionally appraised.


Tags: bankruptcy, machine appraisal

Construction Equipment Appraisal Can Boost Business Sales Price

Posted by Equipment Appraisal Services on Mon, Aug 24, 2015 @ 08:00 AM


When selling a construction business, some owners are confused by the need for a construction equipment appraisal. They wonder why they can’t take the equipment purchase price, subtract any accumulated depreciation, and use that as the equipment value. While this may seem like an expeditious approach, it doesn’t always yield the best results when providing a machinery valuation to potential buyers.

Most business owners purchased their construction equipment at various times and in various conditions, building an inventory of cranes, backhoes, forklifts and other used machinery and equipment over the years. Some pieces of equipment may have been used more heavily than others, but were maintained well enough that they still have plenty of useful life left in them. When the business is sold, the owners want to receive the highest sales price possible. Buyers, on the other hand, want to pay the lowest price possible.

That is why it is necessary to bring in an accredited equipment appraiser to assess equipment values whenever a business sale is considered. Equipment appraisers that have received the Accredited Senior Appraiser (ASA) or Accredited Member (AM) designations in Machinery and Technical Specialties (MTS) from the American Society of Appraisers (ASA), and can provide needed support information that could help substantiate an asking price. The benefits of a professional machine appraisal include:

  • Appraised Value is Often Higher than Depreciated Value: The depreciated value of a machine is a useful calculation, often for tax purposes, but it doesn’t necessarily reflect the actual value of a particular piece of equipment. An appraiser can take into account maintenance, wear and tear, potential sales price on the open market, and estimated remaining lifetime earning potential among other factors to arrive at an equipment appraisal.
  • Buyers Appreciate Sellers Who Can Help Make Their Lives Easier: Since the sale price of a construction business is often quite substantial, there is usually some type of bank financing involved in the purchase. Any lenders will want the buyer to provide a machinery and equipment appraisal for collateral purposes and to justify the loan amount. Once the sale is complete, the buyer will need to set up its own asset and depreciation accounts, and will also need this information.
  • International Sales Open a Wider Market: Perhaps the business has grown to a point where it could attract the attention of an international conglomerate, which could raise the sales price substantially. International buyers, however, will need to see proof that the price they are paying is comparable to what it would take them to establish their own foothold in the market. The often rely on a machine appraiser to help them understand valuations and opportunities in international markets.

A construction equipment appraisal from an equipment appraiser is definitely a plus when selling a business. Equipment Appraisal Services is a nationwide provider of certified machinery and equipment appraisals for business sales, insurance recovery claims, divorce and partnership dissolutions, gifting and donation justifications, estate settlements, allocation of assets, property tax appeals, mergers and acquisitions, financial reporting, and risk management.

Tags: construction equipment appraisal, equipment appraiser

Energy Equipment Appraisal Benefits for Your Fossil Fuel Business

Posted by Equipment Appraisal Services on Fri, Aug 21, 2015 @ 06:30 AM


Let's face it, working in the fossil fuels industry is hard. There are long hours, tough work and solid risk that your latest well or construction project may not work out as well as you hope it will. But there is no other industry where the potential rewards can so strongly outweigh the risks, if you're running your business right. After all, there's a reason why people refer to a sudden windfall as "striking oil". In today's post, we're going to take a solid look at how you can help keep your oil field, fracking, transportation or processing business running in the black and reducing financial risk through a energy equipment appraisal.

What an Energy Equipment Appraisal Is:

A machine appraisal involves having an equipment appraiser look over your industrial machinery to determine its equipment value. A trained appraiser will spend time investigating the machine's value by looking at the marketplace and what equipment is selling for. They'll provide a documented report that states the machine's specifications and value conclusions.

What an Energy Equipment Appraisal Isn't:

Having equipment appraisers valuate your machinery doesn't necessarily guarantee that you'll get the appraised value when you're buying or selling a machine, because economic conditions, timing, and supply and demand will play a role in the final selling price. Consider the local economy around Williston, North Dakota when the oil field there was first being worked seriously. Rent, groceries, entertainment - all these items skyrocketed in price because of high demand, as did any local heavy machinery or fossil fuels equipment. By comparison, when a place has been closed down because a field is no longer economically feasible to extract fossil fuels from, the fossil fuels machinery in the area will rapidly go down in price because of low demand.

How an Energy Equipment Appraisal Protects Your Business' Bottom Line:

Having a proper appraisal performed on your equipment ensures that you have documentation of your machinery's value and how that value was determined. If you need a loan to expand your operation quickly in response to higher market demand or a new discovery, you'll be able to provide documentation of your business' assets to help speed up the process and provide collateral. An appraisal also helps provide documentation of fair market value for your energy equipment when it's time to upgrade or replace that machinery.

With these concepts in mind, it's time to take action. Instead of hoping that everything will work out well for your business, get a machinery valuation performed by a well-qualified machine appraiser who is certified by the American Society of Appraisers using the Uniform Standards of Professional Appraisal Practice to ensure your valuation provides proper documentation of your operation's assets whether for tax purposes, insurance claims or to back up equipment values for a sale price when it's time to upgrade or replace your used oil and gas equipment.

Tags: Equipment Appraisal, energy equipment appraisal

Bringing in an Equipment Appraiser when Buying a Company

Posted by Equipment Appraisal Services on Wed, Aug 19, 2015 @ 07:00 AM


Would you ever consider buying a company without seeing it first? Would you trust the word of a stranger? Even if you like to live dangerously and use your instincts to make judgments and decisions, you should confirm those "gut instincts." Machinery and equipment appraisals are most important in businesses that are dependent on expensive machinery and equipment. When you need specialized machinery to manufacture a product, or equipment essential to performing a service, its value and condition has a significant impact on the total value of the business. Before you sign on the bottom line and become the new owner, it pays to hire an equipment appraiser.  

Equipment Appraisers are Experts

A superficial assessment of a piece of machinery or equipment can lead to a large discrepancy in what the seller says it is worth and what the machinery or equipment is actually worth. You never want to pay more than fair market value. Machinery and equipment appraisal professionals have unique knowledge and skills specific to determining the value of machinery and equipment. When you hire an equipment appraiser, that appraiser should be accredited by the American Society of Appraisers. You can have confidence in the accuracy of an equipment or machine appraisal when it is done according to the Uniform Standards of Professional Appraisal Practice guidelines.

Machinery Valuation and Equipment Values by Business Type 

Suppose your dream has always been to own an Italian restaurant. Before you make an offer, hire an equipment appraiser to tell you the value of the pizza oven, walk-in freezer, and the commercial-grade coffee/espresso machine. An accredited equipment appraiser knows how to research the values.

Thinking of getting into the commercial landscaping business? If you are interested in buying an existing company, you must consider the value of the riding mowers, chainsaws, garden tools, work truck, and any other equipment that is included in the sale.  Again, a certified equipment appraiser knows how to find the values.

Perhaps you see opportunity in the fitness business and want to open a gym. You need to know the value of the weight machines, treadmills, and other fitness machines. What is a five year-old stair-climber worth?  That's right - an equipment appraiser knows the answer.

Checklist for Equipment Appraisers

Where does one start when trying to determine the value of used machinery and equipment? Appraisers do not all work in the same way, but they generally want to know the answers to the following questions.

  1. What is the function of the machinery/equipment?
  2. What was the original cost when the machinery/equipment was purchased?
  3. How old is the machinery/equipment?
  4. What is the condition and useful life of the machinery/equipment?
  5. Will the machinery/equipment become obsolete due to new technology?
  6. Is the machinery/equipment unique and not easily replaced?

Answers to these and other questions are important because they not only can determine value, but because they can also help a prospective owner project what his or her future equipment and machinery expenses might be. For example, if you know that a piece of equipment will probably not last more than five years, you can estimate what your replacement costs will be in five years. While paying today's fair market value may be your primary goal, you should have a good idea of future expenses for maintenance and eventual replacement of the equipment. 

Knowing Machine and Equipment Value gives you an Edge 

Negotiate from a position of strength. When an accredited equipment or machine appraiser hands you a detailed report, you will know with a strong degree of certainty, what that machine or equipment is worth. You won't have to guess if the suggested sales price is too high, close to market value, or a real bargain.

Tags: equipment appraiser, buying a business

How a Computer Equipment Appraisal Protects Your Tech Investment

Posted by Equipment Appraisal Services on Mon, Aug 17, 2015 @ 11:00 AM


When Qlue Consulting had an office flood, one of the casualties of the disaster was a portability lab built by the company using a lot of unusual equipment, much of which had been purchased at surplus, then manually upgraded by the technicians at Qlue. It was built to give them capability to test work they were doing for clients who had equipment that was no longer being produced and was very difficult to find otherwise. The equipment values were low, but the amount of work and parts put into the system were very expensive. Unfortunately, their insurance covered replacement value and only wanted to pay for the original equipment's low value, rather than taking into consideration the significant amount of labor and upgrade parts that had been added to the portability lab. Qlue spent months fighting with the insurance company to have the full value of the custom portability lab covered in the claim by providing invoices, time sheets and similar onerous documentation.

Why a Machine Valuation is Vital to Protect Your Tech Investment

Though it would have been an additional expense, Qlue could have saved all that effort by having a custom computer equipment appraisal done by a qualified equipment appraiser. But even when you're not building a special-use lab, equipment appraisals can provide legal documentation of your equipment value in case of a loss. A machinery and equipment appraisal can also help you make the decision between when to keep the equipment or when to sell or donate it.  A quality machine appraiser can help you determine not only a machinery valuation for your system, they can help you determine whether or when it is cost-effective to upgrade it.

A computer equipment appraisal provides you with legal documentation of the value of your tech investment. If you have older machinery that is vital to the everyday operation of your equipment, it's well worth having a machinery valuation performed so that you can back up any losses, including what it would take to replace the equipment. Whether it requires going to new systems and new software to run your operation or having the system rebuilt by a custom computer solutions company like Qlue, having your tech equipment's value documented will save a lot of time, effort and headaches down the road.

What's it Worth?

Because equipment appraisers focus on a specific appraisal process, they regularly see equipment much like the old computer equipment that is taking up valuable space in your office. A machine appraisal can help you make the decision of whether it's worth keeping in operation, if it's time to replace it, whether it should be sold or if it should be donated.

Remember, knowing what it cost to originally set up your system may not pay the bills if you have to replace it after several years have passed. Getting a quality computer equipment appraisal completed is the best way to protect your company and your computer system investment now and in the future.

Tags: Equipment Appraisal, computer equipment appraisal

How an Equipment Appraisal Can Help with Asset Risk Management

Posted by Equipment Appraisal Services on Fri, Aug 14, 2015 @ 08:30 AM


Can you think of any situation where an asset you own is free from risk? Financial assets such as stocks and bonds are subject to multiple risks such as company performance, a change in interest rates or a sustained market decline. Physical assets, such as machinery and equipment, are exposed to risks such as mechanical breakdowns, safe operation, and gradual obsolescence due to new technology.

To lower risk and help protect the assets you own, it is incumbent upon you to engage in asset risk management. While your financial advisor can manage your portfolio of investments to lower your exposure to excessive financial risk, they are not qualified to produce detailed reports that quantify risks associated with physical assets. Equipment appraisers provide the detailed information you need to develop a proper asset risk management plan for the machinery and equipment used in your business. 

Machinery and Equipment Appraisal 

If you are buying a business that includes expensive machines and equipment, you don't want to guess what that machinery and equipment is worth. If you already own a business and are trying to decide whether it is better to buy new or used equipment, you definitely need to know something about machinery and equipment values. A machine appraiser or equipment appraiser can do a detailed machinery and equipment appraisal on the used machinery or equipment you are considering. You can then use that appraisal to make an informed purchase decision.

Take the case of a developer who is looking to purchase a piece of heavy equipment. A new track-type tractor that is capable of bringing down a building or leveling rocky terrain, could cost millions of dollars. Even a used Caterpillar track-type tractor can run into the high six-figures. When investing in such an expensive piece of heavy equipment, you can not rely on the seller's price or your personal opinion to determine the worth of the used equipment. You can almost be certain that the seller had an independent machine appraisal before setting a sale price. If you do your own machinery valuation, you can do a better cost/benefit evaluation before deciding whether to buy used or new. 

Other Areas of Concern

The components of asset risk management include identifying, assessing, and prioritizing risk. Following is a list of some of the potential risks an equipment owner might face.

  • Breakdowns that can lead to production delays and lost revenue 
  • Liability in the event that someone is injured by faulty or unsafe equipment
  • Lack of adaptability and customization
  • Limited capacity that can limit sales growth and future opportunities
  • Challenges you face from competitors in your industry because they have more technologically advanced equipment (lower production costs, able to do more with less, etc.).

When you know the potential problems, you can manage risk. Each of these possible asset risks can be managed. Insurance can be purchased to cover the machinery, an injured worker, or the loss of business due to a forced shutdown of the machinery. An owner can develop contingency plans such as temporarily outsourcing production while crucial equipment is being repaired or replaced. Equipment can be inspected more frequently and the interval of time for regular maintenance can be shortened. You can plan your future equipment needs when the equipment appraisal report estimates the remaining useful life of your equipment.  

Take Control of All Your Assets

Unlike financial assets which you can track by simply looking at a monthly statement, the performance and value of physical assets are a little more difficult to assess. You need expertise and experience to evaluate the worth of your equipment. Qualified equipment appraisers can accurately determine the current value so you can better manage those physical assets.

Tags: equipment appraisals, asset risk management

Lovely or Lemon? 4 Benefits of Chemical Processing Equipment Appraisal

Posted by Equipment Appraisal Services on Wed, Aug 12, 2015 @ 09:00 AM


With the extreme volatility in world markets for inputs finally quieting down and becoming more stable, it's a great time to look at expanding your chemical processing business. Though this volatility caused the industry to contract instead of expand from 2010 to 2014, it's projected to expand by 0.7% annually from 2015 to 2020, making the relatively calm economic state we're currently enjoying a great time to expand your operation with better equipment and faster production.

The best way to upgrade your machinery at this time is by purchasing used equipment, because you'll have less equity invested if the industry starts to become explosive again. But without getting a chemical processing equipment appraisal, how can you tell whether that great deal you're looking at is a good equipment value or a lemon that's going to cost your money precious equity just as your company is getting back on its feet? Here are some ways that getting a chemical processing equipment appraisal ensures you'll get what you paid for out of the equipment you're purchasing.

4 ways a machinery and equipment appraisal protects your business

  1. An equipment appraiser can often spot a problem such as obsolescence. A qualified appraiser may recognize potential problems before you make the purchase such as model changes or manufacturers that have gone out of business. If these issues are caught early, you don't throw your money away on equipment a machine appraiser wouldn't recommend.
  2. You'll find out the actual equipment values, which gives you a powerful tool that helps you determine where to start negotiating price. Equipment appraisers are experts at determining what the value of your prospective machinery is currently in the market. If you don't know the market, you can't negotiate from a point of strength.
  3. Equipment appraisals provide a professional estimate of your equipment's worth that can be backed up by solid methodology, which is often required to get bank financing or to make insurance claims for losses suffered. Without a proper machine appraisal, you can't back up how much the machinery is worth and may end up with a substandard loan rate, insufficient funds to make the purchase or losing out on an insurance claim that could keep your business in operation. 
  4. A proper machinery appraisal gives you an appropriate starting point if you need to depreciate your machinery over time. Just because a machine has been completely depreciated by the business you're purchasing it from doesn't mean it has no value - as the hefty price tag would suggest. Having an appraisal gives you a starting point to depreciate the machinery on your own books, at a depreciation rate that reflects the machinery's value in your business as time passes.

These are the top reasons it's vital for the success of your chemical processing business to get a proper machine appraisal before purchasing used equipment. Make sure you have the prospective equipment you're considering appraised by a qualified appraiser who is accredited with the American Society of Appraisers following the Uniform Standards of Professional Appraisal Practice. If you don't make sure the appraiser meets these criteria, your chemical processing equipment appraisal may not be accepted as legal documentation of your equipment's worth.

Tags: equipment appraisers, processing equipment appraisal

Get an equipment appraisal for your property tax appeals

Posted by Equipment Appraisal Services on Mon, Aug 10, 2015 @ 10:00 AM


When you get that envelope from the county or city for your business property taxes, you already know it's going to be higher than what you'd like to pay. But what about when you open that envelope and the figures quoted are much higher than expected, to the point of being far above the actual value of your equipment values? Property tax appeals is one part of the process to get your taxes lowered, but how do you start the process? By getting a quality machine appraisal from an accredited equipment appraiser certified by the American Society of Appraisers (ASA). Here's why:

The tax assessor isn't perfect.

Your local county assessor handles a wide range of assessments, from livestock to residential property to construction equipment and back again. That is the main reason why the property tax appeals process is in place for virtually every government assessment process in existence. What's even worse, most property tax assessors will overestimate an assessment than underestimate it. The National Taxpayers Union estimates between 30-60% of property is assessed too highly, but only 2% of assessments are appealed. The tax man may cometh, but that doesn't mean he knows what he's doing when he gets there.

A machine appraiser knows equipment appraisals in your industry.

Because such a diverse array of property is covered by just a few people in the tax assessor's office, it's pretty easy to determine the wrong equipment value for your property taxes. Whether he marked your construction truck as a diesel with 500,000 miles instead of a gas engine with virtually no life left in it, getting a professional equipment appraisal helps ensure you're only being taxed on what that truck is actually worth. This is especially important if you've made significant modifications to your equipment that drastically changes its value.

Professional equipment appraisers can often provide expert witness testimony.

In addition, appraisers are able to provide not only documentation of their valuation process, they can also provide expert testimony for machinery and equipment if it's needed during the appeals process. Expert testimony can include how the assessed value was determined, provide evidence of why that value was chosen and may even be able to provide details about what was done incorrectly by the local tax assessor's process and methodology that created the inaccurately high value in the first place.

How do I start the property tax appeal process?

To start the process, you're going to need to do some investigation into the taxes. Things to keep in mind are cutoff dates for appeals, what the process involves on your part and when you can expect particular documents from the assessor's office. Once you have a basic understanding of how the system works, start gathering your paperwork and make an appointment to have your overvalued property assessed by an ASA-credentialed machinery appraiser using the Uniform Standards of Professional Appraisal Practice (USPAP). When the appraisal has been completed, compare it against your property tax documentation to determine whether the assessment is too high. Appealing your property tax assessment may be as simple as calling or walking into the tax assessor's office with your documented assessment and having a conversation about the problems with the assessment. If it's more involved, you have options available through the appeals process.

Now that you know what to expect from the process, is it time to appeal? Get a quality appraisal completed and start the process.

Tags: equipment appraisers, property tax

How a Woodworking Equipment Appraisal Protects Your Investment

Posted by Equipment Appraisal Services on Fri, Aug 07, 2015 @ 06:30 AM


Whether you just play around on the weekend with some quality woodworking tools or are a dedicated professional woodworker who has spent years developing your craft and investing in only the best quality equipment, having a professional machine appraiser provide an in-depth woodworking equipment appraisal means you know what you have and what it's worth when it's time to trade, upgrade or collect damages from a shop disaster, especially as growing demand in this $710 million plus annual industry is expected to continue growing at a rate of 3.4% over the next five years. Let's take a good look at how a machinery and equipment appraisal helps you protect your investment.

The Equipment Appraiser

To properly protect your equipment, you'll want to make sure you're dealing with American Society of Appraisers credentialed equipment appraisers using the Uniform Standards of Professional Appraisal Practice. Hiring an appraiser for a machinery valuation who is not certified means the report produced may not be accepted by insurance companies if you suffer a loss.

Equipment Appraisals Process

The appraiser will take a good look at your machinery, both as it sits and in operation. He or she will take note about the manufacturer, the model, any features it has, any additional kits, upgrades or modifications that have been added, how well it runs and if there are any areas where it needs repair or maintenance that affects its performance or equipment value. All these details tie in to the final machine appraisal report that is prepared.

What Your Woodworking Equipment Appraisal Helps With

So what can you do with that shiny new equipment appraisal? Provided that it was obtained using a an ASA-certfied appraiser and USPAP standards, it can give you real insight into where your equipment values stand and prove the value of the equipment to your insurance company if you suffer a fire, tornado, earthquake or other damaging event. It provides documentation of its worth when your tools have been assessed way too high by your local tax assessor. If you're getting ready to go professional and need to secure a business loan, it helps prove the collateral value that's available to the financial institution you're using, and then provides an accurate valuation for tax and accounting purposes later on. A quality equipment valuation provides a starting point for negotiations if you're selling some of your equipment or trading it in for an upgraded model.

What an Equipment Appraisal Won't Do

There are, however, limitations to what an equipment appraisal will do. It won't make your 1963 off-brand table saw suddenly worth $5,000 - unless, of course, it is actually worth $5,000. It won't lower your tax assessment if the assessment is accurate (it's up to you whether you mention it to the tax assessor if your assessment is too low). It may or may not put your kids through college, but if you could afford to spend a college-education's worth of money on woodworking tools, you're probably a good enough woodworker to be able to send your kids to school without selling your hard-won tools. You get the picture.

Having a quality machine appraisal performed on your woodshop tools is a great way to know exactly what you have and what it's worth, whether it's for business purposes, tax accounting, insurance use or just to know what it's really worth. Schedule an appraisal today to protect your investment.

Tags: equipment appraisals, woodworking equipment appraisal

Get an Agriculture Equipment Appraisal to Start Expanding Your Farm

Posted by Equipment Appraisal Services on Wed, Aug 05, 2015 @ 10:00 AM


With low interest rates and an improving economy, many farmers and ranchers across the country are considering expanding their farms. Are you one of them? Before you start shopping for expensive new equipment, upgrades to your barns and other outbuildings or looking at that prime piece of land across the road, your first step should be to get an agriculture equipment appraisal performed on your equipment by a qualified machine appraiser. Why?

A recent report by IBISWorld has shown a continued increase in demand for crops as well as farm machinery, with steady, continued growth until 2021. As our world gets smaller, more and more farmers worldwide are beginning to industrialize, keeping farm equipment values higher than they've been in the past. Before you start looking at expanding, it's vital that you know the worth of what you already have through a machinery and equipment appraisal. 

Fitting Financing

If you're looking at picking up a new piece of equipment? If so, you may be considering financing your new purchase. By having a farm equipment appraisal performed to determine the equipment value of any trade-ins or of the piece you're considering purchasing, you an get a much better picture of where you stand when you get to the negotiating table. Equipment appraisals ensure you're getting a good trade-in value or aren't paying too much for that new tractor.

Upgrade Time

If you're thinking about expanding your farming or ranching operation, you may be considering upgrading your current equipment for newer models or models with more features and options available. You may also want to consider picking up an upgrade by purchasing used farm equipment.  But what are those new features worth? By having a machinery valuation performed by an equipment appraiser, you can ensure that you're not being robbed blind over a little more horsepower, a couple more feet of sprayer boom or a farm truck that has lots of bells and whistles with a lot of problems as well. Upgrades should make your farm easier to manage, not harder because you've made a poorly-informed decision that leaves you stuck with machinery that doesn't live up to its expectations. An agriculture equipment appraisal by a qualified machine appraiser helps ensure you'll be getting your money's worth out of your equipment.

Accurate Financial Picture

Finally, equipment appraisers can help you develop an accurate financial picture to determine whether you are ready to expand your farm at this time. Did you take a standard deduction on an older tractor that is still in prime condition with very few hours on it?  Wouldn't you want the bank to count that tractor as an asset with a value of $15,000, or do you want it counted at the $45,000 it's actually worth? It's hard to figure out exactly where you stand if you don't have a solid idea of where your farm's real net worth stands. An agriculture equipment appraisal helps you figure out exactly what you have and can help you determine what farm expansions and improvements make sense right now, without underselling or overselling your farm's financial situation.

By keeping these reasons in mind when considering a farm or ranch expansion, you can make informed decisions because you know what your financial outlook is like. Having a thorough machinery and equipment appraisal performed on your farm by a qualified equipment appraiser will give you the information you need to move forward confidently to improve your farming or ranching operation.

Tags: equipment appraisers, agriculture equipment appraisal

Equipment Appraisals and the Allocation of Assets

Posted by Equipment Appraisal Services on Mon, Aug 03, 2015 @ 08:30 AM


When a business or manufacturer purchases another entity, Equipment Appraisal Services is often called in as equipment appraisers to provide an allocation of assets. Since a purchase price is often based on a number of factors such as real estate, buildings and equipment, inventory, goodwill, licenses and patents, and anticipated future income, it can sometimes be difficult to set values for each of these assets. Once the entities are combined, there is usually a further co-mingling of assets which makes it even more difficult to specify individual machinery valuations.

Depending on the purpose of the allocation, it may be based on “fair value” under various existing accounting standards or “fair market value” under the parameters of the U.S. Internal Revenue Code. In the immediate aftermath of the acquisition, an allocation of assets is used to set up accounting records and depreciation schedules. Fair value is the assets value at the measurement date.

When an allocation of assets is used as the basis for federal income tax reporting purposes, “fair market value” is used. This is the estimated amount that may be reasonably expected for a property in an open market exchange between a willing seller and buyer.

Both the buyer and seller of a business will need to report to the IRS how much the business was sold or bought for and the make-up of the price.  Since both parties are reporting the numbers, there needs to be consistency.

Beyond the allocation of purchase price, there are other examples where equipment appraisals might be required.  These include:

  • Insurance Claims: In the event of an accident or natural disaster, it may be necessary to set an equipment value on some of the assets of a business. If, for example, a fire damaged half of a manufacturing plant, the insurance company would want to know the value of the affected machinery.
  • Divorce Litigation: Divorces can get messy when the partners are also business partners. Each may be entitled to a share of the business. In addition, a divorce settlement may entitle a non-business partner to a certain percentage. In either case, it may be necessary to conduct a machinery and equipment appraisal in order to ensure an equitable distribution of assets.
  • Loan Financing: It is often necessary to put up asset collateral as a guarantee when borrowing money from banks or the Small Business Administration. If your business needs to borrow $1 million to purchase new equipment, our machine appraiser will help find the combination of existing equipment that will satisfy the lender’s requirements.
  • Donations: In some cases, you may decide that a piece of equipment has served its purpose for your business, but that it could still provide a valuable service if donated to a charitable organization. In this case, a donation appraisal will help to determine an accurate value for the machine so that it can be removed from your depreciation schedules and recognized as a charitable donation for tax purposes.

Equipment Appraisal Services is a nationwide provider of certified machinery and equipment appraisals for insurance recovery claims, divorce and partnership dissolutions, gifting and donation justifications, litigation, bank financing collateral, allocation of assets, property tax appeals, mergers and acquisitions, estate settlements, financial reporting, and risk management.

Tags: equipment appraisals, allocation of assets