Equipment Appraisal Blog | Understanding Machinery Appraisals

Equitable division of assets and divorce appraisal of equipment

Posted by Equipment Appraisal Services on Fri, Feb 22, 2019 @ 08:00 AM

equipment_appraisal for divorce

For business owners, creating an equitable division of assets during a divorce means taking the value of existing equipment into account. Since divorces can be contentious matters, there are a few considerations to keep in mind when planning to get equipment appraised before a divorce. 

What to Expect in a Divorce Appraisal

During a divorce, couples must split all marital assets. Just as the couple will need to divide the house and the cars, a divorcing couple with a business must divide the company's assets.

Circumstances vary, but a general rule of thumb is that anything owned by one party before the marriage does not count as a marital asset, thus is exempt from being split. Any property, personal or business, acquired after the marriage counts as a marital asset and must be shared. So if one person owned a van before getting married, they maintain ownership of the van, but if the van was acquired as a company car after the wedding, its value must be split. 

In order to divide assets fairly, the couple must agree on their worth. While it's relatively easy to get a valuation of a van using Kelly Blue Book or the equivalent, it's not so easy to get the valuation of business assets. That's where an appraiser comes in: A qualified appraiser can examine the company's equipment and calculate value, so the couple can move on with the division of marital assets. 

After all of the equipment has been valued, lawyers can determine how to split all of the couple's assets equitably. In some cases, one party may want to buy the other party out of their share of business assets. Other times, the business owner may decide to sell off certain assets, then give the proceeds to their ex. A third option is to retain business assets and give the ex a greater share of personal assets. 

Divorce Appraisal Concerns 

Maintaining fairness can be difficult in a divorce, as emotions run high on both sides. Sometimes, one party can be tempted to hide assets as a way to punish their soon-to-be ex. Even when both sides are playing fair, the lower-earning spouse can worry about whether they are really receiving everything they're entitled to by law. For this reason an appraisal list, which lists all company equipment to be valued, can guide the process. Once both sides have agreed to the list, the appraisal can move ahead. It's key to select an appraiser who is experienced with divorce appraisals and taking equipment valuations. If things aren't valued correctly, then both sides are harmed.  

Once an appraiser has been chosen, they will value all equipment. An appraiser might take a market approach to equipment valuation, which examines recent sales prices of similar items. This approach is best for common items, since data is available.

The cost approach works well in the absence of recent sales data. In this valuation method, the appraiser determines how much it would cost to replace the equipment new, and then subtracts value lost due to depreciation or obsolescence. To accurately assess how much value the existing equipment has lost, the appraiser may need maintenance records, purchase receipts, and other data. 

Business owners or their spouses who are undergoing a divorce should identify an experienced appraiser early on, so there's a lead time in which the appraiser can get valuation. Our equipment appraisers can work with one spouse, both parties, and their attorneys to develop a divorce appraisal that is objective, so marital assets may be split equitably. 

Tags: Equipment Valuation in a Divorce Proceeding

Accurate Equipment Appraisals Help Move Material Handling Equipment

Posted by Equipment Appraisal Services on Mon, Feb 11, 2019 @ 08:00 AM

material handling

Manufacturers, construction companies, warehouses, distribution centers and many other businesses often rely on material handling equipment to manage the heaviest of loads. This equipment helps in the movement, storage, and control of a company’s goods and parts throughout the production and delivery cycles. It speeds up the entire process, reduces labor costs, and enables the safe transportation of items from one place to another.

Sometimes a business will need to sell or physically move the material handling equipment to another location due to a pending sale, consolidation, expansion, or other business transaction. This may require putting a fair value on the equipment for insurance, legal and possible tax purposes. That is when it is time to call in a material handling equipment appraiser who can provide an accurate, legally defensible estimate of the value of the equipment in accordance with the guidelines and Uniform Standards of Professional Appraisal Practice (USPAP). The different types of handling equipment can be classified into four major categories:

  • Transport Equipment: This equipment moves material from delivery to storage or a work area, between workplaces, and to the loading dock. This might include engineered or robotic storage and retrieval systems, heavy-duty equipment like conveyors, cranes, forklifts and industrial trucks, or manual equipment such as hand trucks, pallet jacks and dollies.
  • Positioning Equipment: This equipment manipulates materials in one location to make it easier for work to be completed on the item. Some examples would include hoists, tilt tables, balancers and industrial robots.
  • Unit Load Formation Equipment: This equipment helps to keep a load together in some manner for transport or storage. This type of equipment includes skids and pallets, cartons, bins and baskets, and crates.
  • Storage Equipment: This equipment is typically found in warehouse environments where materials are stored while they wait to be used in the production process or transported to another destination. Examples of this type of equipment include the various racks, frames, shelves, bins and drawers used to hold goods, stack loads, and provide easy access to parts.

To place an accurate value on the material handling equipment, the appraiser looks at several key factors such as its brand name, age, and adaptability for use in multiple industries. These elements must be balanced against the actual condition of the equipment to accurately determine how much potentially useful life remains in it. When arriving at a fair value, the appraiser might assess an older piece of equipment that has been well-maintained at the same amount as a newer piece of equipment that experienced heavy wear and tear. Accurate maintenance/ repair records and logs of environmental conditions can help tremendously in this phase of the appraisal.

The appraiser will also assess the likelihood of whether a potential buyer will be able to obtain necessary parts to repair the equipment down the road. Any additional features or upgrades might increase the appraisal value as well. In general, the appraiser is trying to determine how much benefit a potential buyer can expect so a dollar amount can be placed on the equipment.

A Certified Equipment Appraisal Report can safely be relied on by potential buyers, banks, lenders, accountants, and attorneys as an honest representation of what the material handling equipment is worth. This can help in making key decisions as to whether or not to invest in buying a particular piece of equipment. If your business is thinking about moving material handling equipment, look for the services of an accredited appraiser.

Tags: Appraising Material Handling Equipment

Concerned About Accuracy? Consider Appraisal Review Work!

Posted by Equipment Appraisal Services on Fri, Feb 01, 2019 @ 08:00 AM

appraisal review




Whether you're dealing with a potential court case, the sale of your company, a bad tax assessment or that loan that will allow you to significantly expand your operations, it's vital that you work with accurate numbers to ensure that the process goes smoothly with no unwelcome surprises. If you've been dealing with an appraiser and something doesn't seem quite right about their numbers, it may be time to think about getting a second opinion. In that case, you may want to look at having appraisal review work completed that allows you to ensure the accuracy of the final result. Here's a quick look at what appraisal review is, what it entails and what you can expect from the process.


Concerned About Accuracy? Consider Appraisal Review Work!

Let's start by talking about the reasons that appraisal reviews are performed. If an appraisal was performed by a company that is not certified, it's often easier to verify the existing work than to have an entire new appraisal performed. This allows a fresh set of eyes to check the figures, calculations and information used for accuracy, providing you with details on where it has worked out and where inaccuracies may lie. Another area where appraisal reviews are used is during the audit process. When a piece of equipment is valued at a particular amount that doesn't seem quite right, having an appraisal review performed allows you to see whether that original figure was accurate or if it needs to be revised.

Among the issues that may make you choose to have an appraisal review performed is having business property in a declining market, a comparison to a business that isn't as close a match as it should be or other aspects of your business that could potentially open you up to a risky financial situation. The appraisal review goes over all of the processes and figures used in the original appraisal, checking those figures and the calculations that were used with them for accuracy. During this time, the appraiser also keeps an eye out for omissions that may have accidentally occurred, such as failing to list an upgrade or an add-on kit for a piece of equipment that would drastically raise its value to potential purchasers.

An appraisal review may also be requested by a financial institution if it feels that the equipment being financed represents a specific potential risk to your business and its ability to repay financing. As an example, if you are purchasing used equipment and wish to finance it through your bank, you may need to provide an appraisal review to ensure the accuracy of the original appraisal prior to the loan being approved.

When you have appraisal review work performed on a previous appraisal, you can quickly determine where the issue with the original appraisal was or if there was in fact an issue at all. This can be a very handy tool for audits and similar work where verification of value is vital to the integrity of the final figures that are determined. However, that doesn't mean just anyone who knows a little bit about pricing is the way to go! You need a certified equipment appraisal specialist who understands the fine nuances of machinery value so that they are using standardized, tested methodologies that will provide you with the most accurate results.

Tags: Appraisal Review Work