Equipment Appraisal Blog | Understanding Machinery Appraisals

Qualified Appraisals and Ad Valorem Personal Property Tax

Posted by Equipment Appraisal Services on Mon, Sep 28, 2015 @ 01:30 PM

Everyone knows that ad valorem personal property tax, property taxes based on the estimated value of what you own, is just a part of life. But what about when you receive a tax assessment that has your machinery valuation estimated much high than what it should actually be? How do you fight the assessment to have it reflect your equipment's actual value? Let's take a quick look:

What's an ad valorem personal property tax assessment?

As a major source of income for governments, ad valorem personal property taxes are based on the assessed value of your property. Ad valorem is a Latin phrase meaning "according to value". A tax assessment doesn't keep up with current equipment value, it only reflects the tax assessor's knowledge of the subject. It doesn't reflect current market trends, slumps in your industry or other factors that may affect the true value of your equipment. It's also not usually customized to your equipment's specific condition, an area where there can be a vast difference between the values.

How is a qualified machinery appraisal different?

Having a machinery and equipment appraisal performed is very different from when a property tax assessment is done on your equipment. A qualified machine appraiser can provide significant details into their appraisal process and justification of value. It looks at whether the equipment is currently in demand in the market. Equipment appraisers will look at the equipment's condition and include that as part of their estimated value. It helps protect the owner when there needs to be verification of the equipment's value, such as when you've had a loss and need to provide documentation to an insurance company or when you're selling your business and want to ensure you're getting what your equipment's worth. A qualified machine appraisal can help provide collateral when you need to get financing for your business. But best of all, if you've had a bad assessment performed that doesn't properly reflect the equipment's valuation, having an appraisal performed by a qualified equipment appraiser helps you fight the assessment.

How you can use a qualified appraisal to fight an ad valorem tax assessment.

Because a qualified appraisal shows the current value of your equipment, it provides legal documentation of the machinery's current value. When you appeal your property tax assessment, your appraisal shows the assessor's office not only the equipment valuation, it also shows how the appraisal was developed. But why is it important to make sure the appraiser you use is qualified to provide an equipment appraisal that will hold up legally? An appraisal by a non-qualified individual won't stand up to scrutiny. To get the most out of your machinery appraisal, make sure the equipment appraiser is certified by the American Society of Appraisers, specifically a Certified Machinery and Equipment Appraiser. This way, you know they're following the legal standard by providing an appraisal developed in accordance with the Uniform Standard of Professional Appraisal Practice.

Though it can be really difficult fighting the tax assessor's office over equipment values, in the long run it's well worth it. But beyond tax benefits, there are even more reasons why having a machine appraisal performed by a qualified equipment appraiser is a great idea. From providing an accurate picture of your business' finances to getting a better price when selling or merging your business, having qualified equipment appraisals helps keep your business running successfully. Contact a machine appraiser today to start the process.

Tags: Equipment Appraisal, ad valorem, personal property tax

Protect Your Business Assets with a Forestry Equipment Appraisal

Posted by Equipment Appraisal Services on Thu, Sep 24, 2015 @ 01:00 PM

With the severity of the western wildfires this summer, it's hard to not feel the impact in the forestry and logging industry. But have you considered what the direct results would be if your logging equipment was lost in a fire? Wildfires can be unpredictable, and a fire can completely ruin a piece of equipment. If you haven't had a proper forestry equipment appraisal completed by a qualified equipment appraiser, you could face serious losses that could close your business. Here's how a forest equipment appraisal helps protect your business' bottom line.

No More Guessing at Equipment Value

Sure, you know what log loaders were going for at the last auction you attended, but is that what your equipment is really worth? Instead of grasping at straws and only having a vague idea of what your equipment is worth, you'll be able to get a solid picture of what your equipment value actually is and the methodology used to help determine that figure. Certified machine appraisers only appraise machines, so they have the experience of not only knowing what similar machinery is valued at, but your specific machine, including information on its condition, any manufacturer-approved kits or upgrades and other details that are often lost in the shuffle of everyday equipment values and sales.

Proper Insurance Documentation

Having to work with an insurance company can be really frustrating, especially when you don't see eye to eye on the value of your equipment following a loss. Take the example of a wood grinder that makes mulch, a very expensive piece of machinery that could cause serious problems for your business if it wasn't covered in a loss. The insurance company might base its coverage based on the industry average, which probably assumes that proper maintenance and cleaning isn't performed. The insurance company could even claim that the grinder was a fire risk because it wasn't being taken care of and that they don't need to pay the claim because the loss happened due to negligence.  Having equipment appraisals done on your machinery helps you back up the machinery's value with your insurance company, making it easier to get a claim processed for the full value of the machinery.

Get a Machine Appraisal with Legal Standing

What if your machinery is lost because of someone else's negligence or if your insurance company needs to be taken to court to get the full value of the machinery back? A machine appraisal provides legal proof of your machine's valuation that will hold up in court - if it's done correctly. To have legal standing, a machinery and equipment appraisal must be completed using the Uniform Standards of Professional Appraisal Practice by American Society of Appraisers-certified equipment appraisers. It also provides legal proof of machinery value in a wide range of other circumstances, from business sales and tax assessments to financing collateral and creating an accurate picture of your business' financial health.

Your potential for loss without a proper machinery and equipment appraisal goes far beyond wildfires, however. A bad economy, poor bookkeeping and high property taxes are other possible sources that can be helped with proper equipment appraisals performed by a qualified machine appraiser, by providing access to financing, giving you a sound picture of your business' financial health and options for appealing an inaccurate personal property tax assessment. Talking to a reputable machine appraisal company about having a quality equipment appraisal performed today to protect your business.

Tags: equipment appraisals, forestry equipment appraisal

Asset Appraisals - Difference Between Reproduction and Replacement Cost New

Posted by Equipment Appraisal Services on Mon, Sep 21, 2015 @ 10:00 AM

A logical starting point for determining the value of a piece of used machinery or equipment would be to find out what it would cost to replace it with a new piece of machinery or equipment that essentially has the same function and capacity. A machinery or equipment appraiser would then adjust the replacement cost new by deducting for such things as physical deterioration, financial obsolescence, and economic obsolescence. Calculating and deducting those costs from the replacement cost new will give you a good estimate of the value of used machinery and equipment.

When the decision is made to replace equipment, either out of need or desire, a business owner would naturally seek to find the lowest cost of replacement. Does it make more sense to buy a new piece of equipment or is it more cost effective to reproduce a replica that is almost identical to the equipment being replaced?

Defining Replacement and Reproduction Cost New

Replacement is the current cost to buy a similar piece of equipment that has the same utility as the equipment being appraised. The new equipment does not have to be the exact same model, but it should perform the same essential functions as the equipment being replaced.

Reproduction new is the current cost of reproducing a new replica of the equipment while using the same or very similar materials. Reproducing an exact replica is often more expensive than replacing equipment.

Building it One Piece at a Time

Equipment appraisals help determine equipment values and they may provide the information a business owner needs to decide whether or not to try to reproduce the equipment in question. If the cost of producing an almost exact replica of the appraised equipment is higher than the cost to replace it with something new that is similar or better, the choice would be fairly obvious.

After a machinery and equipment appraisal is done,  a very low fair market value may be assigned. The machinery appraiser may tell you that due to the age of the machinery, no replacement parts are available. It would be prohibitively expensive to forge new parts and assemble a new machine from scratch, but you could still do it. 

In one of his many hits, Johnny Cash described how he built his own special Cadillac out of all different parts he managed to sneak out of the GM assembly plant. He built it One Piece at a Time, illustrates the difference between replacement and reproduction new costs. Replicating the Cadillac described in the song today might cost a million dollars, and even though new Cadillacs are pricey, buying a new one to replace the old one would make a whole lot more economic sense. 

Why Appraisers Use Replacement or Reproduction Cost New  

When appraisers can easily gather the replacement cost new of an asset, this value is used when begining the cost approach. This takes additional time and research to find out how much an asset is selling for today.  In some cases either due to uniqueness, age of a piece of equipment, or due to the level of research requested for the appraisal, the reproduction cost can be used as well.  The reproduction cost new is developed by taking the original cost of the asset and bring it to today's dollars by using such trends as the Producer Price Index (PPI) that is published by the Bureau of Labor Statistics.

Your Situtaion Will Dictate What is Needed

Equipment appraisers can estimate the current equipment cost new of equipment as well as the current value of equipment. Using an insurance loss as an example, a policy may reimburse a business owner for the replacement cost or the actual cash value of an asset.  Where replacement cost would result in the equipment being purchase brand new to replace the old one, the actual cash value would look at it in the current condition and age as of the loss.  This is the equivalent of the fair market value.

Tags: replacement cost new, reproduction cost new

6 Areas Considered in a Food Production Equipment Appraisal

Posted by Equipment Appraisal Services on Thu, Sep 17, 2015 @ 11:00 AM

There's no doubt that there is value in having a food production equipment appraisal done to determine your equipment values, whether it's to back a new loan for expansion or because you want to get a fair price for your business. But when you're using your equipment on a daily basis, what areas will impact your machinery valuation? Let's take a look at the top areas considered when food production equipment is put through a machine appraisal and how much they impact the equipment value.

6 Areas Considered in a Food Production Equipment Appraisal

  1. Age of the Equipment. Though you might assume that this would be one of the biggest areas of concern, it often doesn't have as much of an effect as you would expect on a machinery and equipment appraisal. Older equipment in good condition that provides general services, such as mixers or ovens, and which also has a regular supply of repair or service parts available can often go for as much money as a less well-known brand that is newer but is harder to repair or isn't considered a premium brand.
  2. Condition of the Equipment. Has the equipment been well-maintained? Are any repairs up to date? If the equipment is in good condition and has been taken care of, the machine appraiser knows that it will last longer and so will receive a higher appraisal value. Beyond simple cosmetics, this includes routine maintenance, so having a maintenance and repair log helps prove the quality of care the machine has received over time.
  3. The Equipment's Features. As time passes, features that may start out as upgrades or options tend to become standard as competition demands new features. Depending on the age and type of the equipment, it may have more features than other models that are available, leading to a higher value when equipment appraisals are performed.
  4. Any Kits or Upgrades. Does the equipment have additional, manufacturer-approved kits or upgrades added? These features will help improve a food production equipment appraisal. Missing equipment, such as safety guards, and kits or upgrades that do not meet the manufacturer's specifications can actually decrease the value, as they may put too much strain on the motor or compromise the equipment's safe usage.
  5. Current Market Conditions. Beyond simple supply and demand, what are the current market conditions? Equipment appraisers take into account a slowdown in your industry because it will create less demand for used equipment as other businesses sell off their food processing machinery, lowering your machinery's valuation to reflect those conditions.
  6. Demand for that Particular Equipment. Has there been a sudden surge in popularity of a particular piece of equipment? If it's been selling quickly or for more than the appraised equipment market value, this is taken into account when a machine appraiser provides you with a machinery and equipment valuation, especially if it appears to be a long-term demand rather than a short-term craze that will die out fairly quickly.

When you're considering food production equipment appraisal, make sure you're getting a quality appraisal performed. An appraisal performed by someone who is not qualified or who uses unqualified methods won't help when you need to get financing, have a merger or sell your business, because it's not been completed using recognized standards. Always use an equipment appraiser who is a Machinery & Technical Specialties accredited appraiser through the American Society of Appraisers and who uses the Uniform Standards of Professional Appraisal Practice.

Tags: food production equipment

Why Book Value is Meaningless for an Equipment Appraiser

Posted by Equipment Appraisal Services on Mon, Sep 14, 2015 @ 10:30 AM

An equipment appraiser does not normally use book value because it may not represent fair market value. The cost of an asset at the time of acquisition is noted as the initial book value. It is a historical cost that rarely comes close to representing equipment value when sold in a free and open marketplace. A machinery and equipment appraisal should be relevant at the time of the appraisal and not at a historical point in time.

Equipment appraisers steer away from using book value to determine equipment values because of the ease at which figures can be manipulated. A business owner might carry a high equipment value on the books if he was attempting to inflate the value of his company. Similarly, there are accounting "tricks" that can be used to make equipment appear to be worth less than its fair value. 

Accredited equipment appraisers are held to a strict professional code of conduct and are prohibited from creating equipment appraisals that are obviously favorable to the party paying for the appraisal.  An equipment or machine appraisal should represent an unbiased opinion of the fair market value of equipment or machinery at the time the appraisal is completed.  Following are several of the ways in which book value can misstate the fair market value of the equipment or machinery being appraised.

Depreciation

It is usually in the best interest of a company to use an accelerated method of depreciation on the equipment and machinery that it owns, particularly if it is financing or leasing that machinery and equipment.  A company can deduct the depreciation of machinery and equipment on its tax return to lower its tax liability. By reducing the amount you owe to the IRS, the savings can be applied for other purposes.

  • You can pay off financed equipment sooner and save on interest and other fees
  • You have more flexibility to tailor your budget in anticipation of future expenses

Whether you use a straight-line or accelerated method of depreciation, the net effect is to lower the value on your books of the property being depreciated. Theoretically, a depreciated asset should have no appreciable value after it has been 100-percent depreciated. However, that is rarely the case.

If you can depreciate the full acquisition cost of a piece of machinery designed to have a useful life of 30 years in only five years, the machinery valuation should be well in excess of its depreciated value. When a machine appraiser does an appraisal, using book value would be meaningless.  A machine with 25 years of useful life remaining would obviously have a significant fair market value. 

As a word of caution, if you use an accelerated method of depreciation and decide to sell that equipment, you may create some tax obligations. If the equipment is sold for more than the depreciated value shown on the books, the difference between the selling price and the price on your books is treated as ordinary income under IRS Section 1245.

Industry Demand Changes

The value carried on your books could be effected by changing demands within your industry. If you own equipment that can only be used by companies in your industry, and demand for the products sold in your industry starts to fade, your equipment could be worth far less than indicated on the balance sheet. Economic obsolescence will lower fair market value. Conversely, if industry demand is overwhelming industry supply, your equipment could sell at a premium.

Relying on book values is not an accurate method of appraising machinery or equipment. It can easily understate, and sometimes overstate fair market value. While it is possible to be a true reflection of current value, what appears on a company's books should be taken with a grain of salt.

Tags: equipment appraiser, book value

5 Reasons Why you Might Need a Farm Equipment Appraisal

Posted by Equipment Appraisal Services on Thu, Sep 10, 2015 @ 09:00 AM

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Think about how much it would cost you to buy a riding mower to cut the two-acres of grass around your house. For a farmer, who may have a 100-acres or more of land to tend to, the machinery needed to cut, plow, plant and irrigate, might cost 10, 20, or even 100-times as much as the $2,500 riding mower you use to keep your lawn looking good. 

While you probably don't think about equipment value when you are out plowing the fields, there are many times when knowing equipment values is of the utmost importance. Take a look at these five different situations where a farm equipment appraisal might be useful.

 

1. You're a farmer interested in buying a used piece of equipment 

Properly maintained farm equipment can last for many years. It is often a wiser use of your money to invest in a solid piece of used farm equipment instead of paying a higher price for new equipment. Hiring an equipment appraiser to do a farm equipment appraisal can help you make the right decision over whether to buy new or buy used. 

2. You want to sell a tractor and don't know what to ask

Just like people have different opinions of what their cars are worth, the same holds true for tractors and combines and other types of expensive farm equipment. Although it may sound strange, many farmers love their tractors almost as much as they love their kids. Even though they know that the smart business decision is to get a newer and more powerful tractor, they don't really want to let the old tractor go. So, they put an unrealistically high equipment value on it and it does not sell. If you really need to sell your old tractor so you can afford to buy the new one you need, an objective machine appraiser can help you set the price for a quick sale possibly in a farm equipment auction.

3. You want to insure your farm equipment

Equipment appraisals are often done to establish a value for insurance purposes. It is unlikely that you will be able to find an insurer who will offer you replacement cost coverage at a reasonable premium on highly depreciated equipment. No insurance company is going to insure your farm equipment for $1,000,000 if the fair market value is only $200,000. At the same time, as the person paying the premium, you need to know the fair market value because you don't want to buy more coverage than you need.

4. Find out the Real Replacement Cost

If a light bulb burns out you know it will only cost about $5 to replace. If you need a new washing machine, you can expect to pay around $500 for a decent new one. But how could you calculate the cost of replacing an irrigation system you installed 10-years ago? A machine appraisal of an irrigation system would not only include the pump and any above-ground sprinkling system, but it would also include the thousands of feet of underground piping. An appraiser would calculate the cost of the new equipment, the labor to remove and replace the old system, and just for good measure, the economic impact it would have on your ability to productively operate your farm. 

5.  If leasing, should you exercise the option to buy?

Expensive farm equipment is often leased. Just like when you lease a new car you usually have the option to purchase the farm equipment at a specific price that is shown in your lease agreement. The decision to exercise that option usually comes down to the remaining value of the machinery. If you have properly maintained the equipment and not run it into the ground, it may be worth significantly more than the price at which you can buy the equipment.  A farm equipment appraisal near the end of your lease can help you decide the best course of action to take.  

Tags: Equipment Appraisal, farm equipment appraisal

Why an Accredited Equipment Appraiser is Required for a Donation

Posted by Equipment Appraisal Services on Tue, Sep 08, 2015 @ 09:30 AM

equipment_appraiser_donation_appraisal

You don't have to go to church every Sunday or be particularly religious to believe in the biblical saying that "to those whom much is given, much is expected." No matter how much or how little you can afford to give, making a donation to a worthy cause always makes you feel good. Many people donate cash and many others choose to make a donation of property.

While giving is its own reward, the IRS also rewards those who make charitable contributions to qualified organizations. As long as you meet certain guidelines and follow some basic rules, you probably will be able to take a deduction on your tax return for the fair market value of your donation. 

Claiming a Deduction for Donated Equipment or Machinery

Individuals, partnerships, and corporations are all eligible to claim a tax deduction on their tax return for donated equipment or machinery. When you donate equipment, machinery, or any other tangible asset, and the listed fair market value is in excess of $500, you are required to fill out IRS Form 8283 (Non Cash Charitable Deductions). On donations above $500, but no more than $5,000, you need to fill out Section A of Form 8283 and you usually don't need to provide an equipment appraisal. On donations above $5,000, you must fill out Section B of Form 8283 and you usually do need to provide an appraisal.

Why Does the IRS Require Equipment Appraisals?

The agency that is responsible for collecting taxes does not necessarily think that everyone will overstate the value of their donation so they can claim a bigger deduction, but they are not stupid. People do cheat.  Have you ever donated a bag of slightly worn clothes to Goodwill worth maybe $50 and claimed a deduction for $450 (remember no appraisal is needed if the donation is under $500)? 

The IRS generally does not question donations under $500, but you should keep records/receipts of all charitable gifts just in case they do. An equipment and machinery appraisal is required on more highly-valued items because the potential "cheating" can seriously reduce the amount of revenue the agency receives. 

In most cases where you need an appraisal, you don't need to attach it to Form 8283 and submit it with your return. An exception would be if your claimed donation is over $500,000. Keep the donation appraisal in your records just in case the IRS questions the amount of the claimed deduction.

Who is a Qualified Appraiser?

Equipment value established by an accredited equipment appraiser is more likely to be accepted as accurate by the IRS.  In general, a qualified or accredited equipment appraiser has the experience, education, and ability to perform an equipment or machinery valuation by following generally accepted appraisal standards.  Accredited equipment appraisers are so designated by the American Society of Appraisers and are compliant with the Uniform Standards of Professional Appraisal Practice.

You would not want to rely on a real estate appraiser if you needed to have your art collection appraised. You would hire an accredited art appraiser. Similarly, if you are interested in a machinery and equipment appraisal to establish fair market value for your donation, you would hire an appraiser specifically trained to appraise the type of property being donated. 

How do you find a Competent Equipment Appraiser?

Don't try to save a few dollars by hiring the cheapest appraiser you can find. You should always look for an accredited equipment appraiser who has the credentials to do an accurate assessment of equipment values. Using an appraisal company that only hires accredited appraisers is probably the best way to assure that you will get a competent equipment appraiser and an accurate appraisal for the equipment you want to donate. 

Tags: equipment appraiser, donation appraisal

Understanding Levels of Equipment Values When Selling a Company

Posted by Equipment Appraisal Services on Fri, Sep 04, 2015 @ 11:00 AM

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The price you would be willing to accept if you were selling a company is highly related to your motivation for selling your company. If someone came up to you and held a gun to your head, you would probably agree that any price they suggested was reasonable.  If you were a billionaire and decided you were tired of one of the companies you owned, you could take your time and wait until you got the price you wanted.

Before selling a company with assets that include expensive machinery and equipment, it is important to know the machinery and equipment values. A machinery and technical specialties (MTS) appraiser is the person to call because he or she has the specific knowledge and expertise it takes to accurately determine machinery and equipment value. A professional equipment appraiser will do a thorough analysis of the equipment, taking into account its age, condition, replacement cost, and many other factors. In addition to the in-depth analysis of the machinery and equipment, the reason for selling a company will help the appraiser provide you with the most accurate equipment appraisal.

Levels of Machinery and Equipment Values

Levels can be thought of as reasons for selling a business. While there are many nuances to machinery valuation, most sales can be categorized as being sold at fair market value, at an orderly liquidation value, or at a forced liquidation value. Each of these values take into account the uses for the equipment, the compulsion to buy or sell, and the time that you have to sell.

Fair Market Value

Used machinery equipment appraisals are opinions and the value quoted is a starting point for negotiation between the buyer and the seller. It is natural for some tension to exist between the two parties to any negotiation. If a buyer is in desperate need of a seller's equipment, the seller can usually negotiate a higher price. If the seller "needs" to sell equipment, the buyer may get the equipment for a bargain. When a willing seller and a willing buyer are under no compulsion to buy or sell machinery or equipment, a machinery and equipment appraisal can help to establish a fair market value and facilitate a sale. 

Example: A seller could command top dollar for his machinery under the following scenario. A crucial piece of machinery breaks down and halts the production line. For every day the machinery is down, the company loses $10,000. The owner of the manufacturing company finds out that it will take three months to fabricate a new machine. So, he scrambles around and finds another manufacturing company that has the same type of machine. Under normal circumstances, the machine may have a fair market value of $50,000, but because the buyer is in a desperate situation, the seller can ask and get $70,000 for his machine.

Orderly Liquidation

In an orderly liquidation, the seller has a reasonable amount of time to sell the company's machinery and equipment. A machine appraiser would consider the date at which the machinery must be liquidated and the reasonable valuation that would attract a willing buyer within that time period. An example of the need for an orderly asset liquidation might be an owner who wants to retire by a certain date and will need the proceeds of the sale to buy his luxury condo in Miami Beach.

Forced Liquidation

A machine appraisal would probably come in at the lower end of the spectrum when the sale of a machine is mandatory and not a matter of choice. A judge in a bankruptcy case may order the machinery, equipment, and other assets of a company to be liquidated in an attempt to compensate unpaid creditors.

Equipment appraisers are careful to examine all the factors that go into the value of equipment. Sometimes, why you are selling is almost as important as what you are selling.

Tags: equipment values, equipment appraiser, selling a company

How Deregulation has Affected Electrical Equipment Appraisal Values

Posted by Equipment Appraisal Services on Wed, Sep 02, 2015 @ 10:30 AM

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When you're talking to anyone in the electrical production sector, deregulation is a topic that virtually everyone has an opinion about. It's good for competition and fosters private industry, it's bad because it can cause problems with keeping the grid functioning properly, it's a bit of both. Whichever your opinion on the matter, there's no doubt that deregulation has made broad, sweeping changes to production and distribution of electricity. But has it changed how electrical equipment appraisals are performed? Absolutely. Here's why:

The primary purpose of deregulation was to put electrical production and distribution onto the open market, making it possible for private companies to compete against local and regional utility companies. But that also meant that price regulation was also put by the wayside, leaving competition to decide market prices for electricity. This has made a big difference between what kind of plants and equipment were being used and makes a big change in how equipment appraisers have to approach machinery valuation as many more market factors may come into play. This can include fuel prices, deregulation differences by state, investment opportunities and similar effects.

As an example, if one state has high natural gas costs, a machine appraisal for equipment from a natural gas power generation plant may not have a high value, because many plants were built when natural gas costs were low. But in a nearby state, fracking operations may have begun that is producing a lower local price for natural gas, making natural gas plants more affordable to operate and creating a higher equipment value for that particular area.

Approaches to Electrical Equipment Appraisal

There are three approaches typically taken to electrical equipment appraisal - market, income and asset. Here are the basics of each approach:

  • A market approach looks at the value in terms of buyer and seller actions. Sales of similar plants are analyzed and then adjusted down to the plant being appraised with size, production expenses, the time that has passed since the comparable sale, the ages and technology levels of the plants and the economic differences between the plants' locations.
  • The income approach involves basing the value on the future income. The income appraoch often is not used in machinery and equipment appraisal due to the number of factors that the methodology does not take into account.
  • A cost approach determines the cost to reproduce the plant or a modern rendition of it. The cost of replacement includes deductions for physical deterioration of the existing plant, economic obsolescence which is affected by fuel prices, functional obsolescence caused by technological advances and obsolescence caused by necessary capital expenditures, such as payments nuclear plants are required to pay for decommissioning trust funds.

Obviously, the effects deregulation has had to electrical equipment appraisal is a complex and many-faceted issue that requires the appraiser to look at many diverse issues when calculating machinery value. Having a qualified machine appraiser with experience in the industry evaluating your equipment who knows how to research the current market is the best way to ensure you're getting a fair value for your equipment.

Tags: equipment appraiser, electrical equipment appraisal