Equipment Appraisal Blog | Understanding Machinery Appraisals

When you are trying to find an equipment appraiser who can provide quality equipment values, how do you know a good company from a bad one? Equipment appraisal firms provide machinery appraisal services to the business community and must be reliable and accurate in their documentation. Here's our look at how equipment appraisal firms operate and what to look for in a quality machine appraisal firm:

How Equipment Appraisal Firms Operate

Equipment appraisal firms provide quality machine appraisal services to a variety of industries. Though other people may purport to provide equipment appraisals, only a report from a certified equipment appraiser may be accepted in a variety of situations, including legal action, financial transactions, tax appeals, risk management and similar situations. But what makes an equipment appraisal firm different than someone who may perform appraisals for a dealership, auction company or similar business?

Independence and Scrutiny

One area to take into consideration is independence. An independent machinery appraisal company provides documentation of the machine's value that will stand up to scrutiny because they have no vested interest in the outcome of any transaction. By comparison, think about the last time you went to a car dealership with a really bad trade-in vehicle. The sales reps took a look at your trade and, because they had a vested interest in selling you a new vehicle, appraised it at a much higher value than was actually worth. At that point, they can write off the loss as the cost of doing business and claim a lower profit for the year, lowering their taxes.

Proper Certification

Another area where qualified machine appraisers stand out is in the area of certification. Being certified by an accrediting agency or organization means that the appraiser has had training and been tested to ensure they'll use the appropriate methods and techniques when appraising your equipment. An Accredited Senior Appraiser (ASA) and Accredited Member (AM) in Machinery & Technical Specialties (MTS) are designations from the American Society of Appraisers (ASA) that proves that the appraiser you're hiring to value your machinery has a solid grasp of the techniques and methodologies used to value equipment. They'll often take into account different factors including the expected lifespan of the machinery, current market conditions and many more issues that can affect the valuation of your machinery.

Appropriate Approaches and Methodology

Part of the qualification for certifying as a machine appraiser includes learning how to apply the appropriate approach and methodology to the appraisal. This is of vital importance in many situations, including insurance claims, business value when changing ownership or buying out a partner, getting financing for a business expansion, providing documentation for a property tax appeal and many other situations. If your machine appraisal doesn't include the appropriate methodology, it may be rejected and your effort and money wasted.

Now that you know what to look for in a firm offering quality equipment appraisals, it's time to find one that will work well with your company's needs. If you haven't found a company yet to provide you with quality equipment values, please contact our expert equipment appraisers at Equipment Appraisal Services.

As tax season is in full swing, there are two ways to handle depreciation of equipment: the easy, risky way or the harder, smart way. Though it's easy to use the government's standard depreciation tables and schedules to depreciate your equipment values over the years, you may actually be creating a situation where you're opening your business up to risk or leaving money on the table when looking at potential opportunities. Depreciation is legal documentation of your business assets and should be accorded the same regard as your deed to your location or your business licenses. Here's why using machine appraisal to get a proper figure for depreciation of equipment can make a huge difference to your company:

How miscalculating depreciation of equipment affects your company's potential

Situations where value remains higher than the standard depreciated value

In some situations, an equipment appraiser may assign a higher value than a standardized depreciation table. If you use a depreciation table in these circumstances, you're stating a lower value than the machine may actually be worth. This is a problem in a few areas. A tax agency may claim that you are intentionally claiming a lower value to avoid taxes, especially if you use the equipment for an extended period of time after it has been fully depreciated per the standardized table. You can't leverage your assets fully to take advantage of opportunities that may come your way because your financial institution doesn't know you have more value in your machinery than stated. Not having an accurate machinery valuation may cause problems with getting cash from your insurance company to purchase comparable equipment in a loss because the tax record and depreciation is the only proof of value you have.

• Is your equipment seeing easy use? If it isn't getting normal wear and tear, it might have a higher value than an average piece of equipment of that type and quality because it will be expected to last longer.
• Did you invest in quality equipment that is still expected to be in service and retain value beyond the end date of the standard depreciation table for that type of equipment? If so, it might lose value at a slower rate and will still have value long after it has been completely depreciated.

Situations where value may be lower than the standard depreciated value

But there are also situations where your value may be below the standardized depreciation tables. In these instances, you may be overstating the value of the equipment, leaving your business open to risk and higher taxes. Paying taxes on assets that are shown as having a higher value creates a false high value, raising your business taxes. At the same time, using these figures to secure financing may open your business to additional risk when an opportunity doesn't pan out and the machinery won't sell for its depreciated rate.

• Does your equipment tend to see heavy or abusive use? If it does, it might have a lower value than an average piece of equipment of that type and quality due to a shorter expected lifespan.
• Is it of average or bargain quality? It may not last the full length of the depreciation table, forcing you to pay higher taxes on it until it fails.
• Have there been issues with irregular maintenance or uncompleted repairs? These can lead to a shorter lifespan, causing it to be removed from service before it's completely depreciated.

If you need to have equipment appraisals performed to get a corrected depreciation value, Equipment Appraisal Services can help. Our certified, highly-trained equipment appraisers are ready to find the right value for your machinery.

Divorce is almost virtually never a simple process. When people who shared their lives decide to leave a marriage, it's natural for each party to want what's best for them. When it comes to dealing with equipment values, having a professional equipment appraiser provide a machinery valuation helps ensure everyone gets a fair share of the business. Here's why.

Dealing with Divorce: How an Equipment Appraisal Can Help

• Equipment values are different that that of home, auto or cash item values. While it's much easier to identify the value of common, everyday items, machinery values can have a range. This range can be manipulated by one party to ensure they're getting a better deal than the other party is receiving. This often plays out that the leaving partner wants a higher amount of the business than the remaining partner is willing to sacrifice out of concerns for whether the business is able to remain solvent. Which ever side of the divorce you're on, having an equipment valuation performed by a certified machinery appraiser means the value will be determined in a way that is fair to everyone.
• You need to meet legal requirements. Though there are a wide range of appraisal methods that can be used on business equipment, the court system often limits the methodologies that can be used to determine equipment value when dealing with the dissolution of marriage. The most common methodology is determining fair market value, which takes a wide range of changing factors into account, to determine a value that is fair to both sides of the dissolution if the business is to remain in operation.
• But what if there's a push for one partner to get out of the business? In cases like this or when the equipment needs to be sold quickly so that both parties can receive their appropriate profits, fair market removal may be used.
• If a situation is in place where both parties want out of the business and need the money quickly to start their lives over, they may be willing to settle for liquidation value, which provides a significantly lower value for the machinery, but tends to produce a solid cash value for the equipment which would then be split equitably among the parties. Though this is a rarely used technique, it is still in place in many no-content divorces and similar situations where neither party is remaining vested in the company's interests.
• Certified machinery appraisers can work from a variety of positions. They can be hired by one spouse, the other spouse or by council. They can also work for both spouses, helping both parties reach an equitable distribution of the business value. Because divorces often demand a certain amount of testimony, make sure your appraiser has experience working in that type of situation.

Divorce can be a messy process, but equipment appraisals helps make sure everyone's interests are addressed during the process. If you haven't had the chance to speak with a certified equipment appraiser, we're here to help.

If you're in the printing industry, you may have considered having a printing equipment appraisal performed to determine the value of your machinery. But what exactly is involved in having your machine appraisal performed and what is an equipment appraiser looking for when they inspect your machinery? Here's our take on what is considered when a printing equipment appraisal is performed:

What an equipment appraiser looks at during a printing equipment appraisal

• Does the printing machinery perform properly? This will take a solid look at the quality of the materials the printing machinery is producing, whether it's in the printing quality itself, the binding, edge cutting and trimming or similar processes that are common to printing industry production work. A machine that isn't doing its work properly or needs to be constantly reset to stay within specs may receive a much lower machine appraisal than printing equipment that is functioning as it should, due to the problems such machinery may have down the road in maintaining regular quality.
• Has the equipment been well maintained? This will tell the appraiser about whether further inspection of related systems is warranted. If needed repairs have been put off, it can cause additional wear and tear to connected systems. A qualified machine and equipment appraiser knows they need to check for further issues at that point. You can provide easy documentation of maintenance and repairs through logs, receipts or other service records, helping make that part of the process go a little easier. Poorly-maintained printing equipment tends to have a shorter lifespan and lower value.
• Is the machinery being kept in extremely hot, cold or humid temperatures or dusty, dirty conditions? If it is, it may also wear faster than other machinery that is kept in better conditions. This will also usually cause a lower valuation due to a shorter expected lifespan.
• Does the machinery show signs of significant damage or abuse? If your printing equipment has serious dents, bends or structural issues, it may cause safety issues or fail much sooner than similar printing equipment that has been taken care of properly. A good appraiser will take this into account in terms of how such abuse will affect the expected value of the machinery.
• Has the machinery been altered or had features added that were not approved by the manufacturer? If after-market additions make the machinery work harder to get the job done, even if it provides better features or more convenience, it may cause the machinery to wear faster and have a lower value.
• Is the machinery in demand in your industry? Current market trends can affect the appraised value of your equipment, no matter what your reason for having the appraisal performed. If your industry is booming, the equipment may be valued at a higher figure, while an industry that is in a serious slump may have a hard time selling used equipment.

By knowing the value of your printing machinery, you can make better business decisions, whether it's when to sell old equipment, if you have the assets to back up a potentially risky business opportunity or to gain financing for an expansion that uses your equipment for collateral. If you need to have your printing equipment appraised, please contact our certified equipment valuation specialists to schedule an appointment.

Ask any business owner, and they'll tell you that running a business is hard work. When faced with serious financial problems, however, many companies have to make a choice between different types of bankruptcy to get out from underneath the financial burdens of a failing business. Whether the business owner chooses to reorganize under Chapter 11 to try to save the business and turn it around or to completely shut it down under Chapter 7, this type of legal action gives the owner some breathing space to deal with the financial issues while still ensuring that the creditors will also get their fair share of what's left. But what part does equipment appraisals play in the process? Let's find out:

Bankruptcy Alternatives

But before you hire a lawyer and start filling out paperwork, it's important that you consider all the alternatives you have to bankruptcy. One of the first steps to take is to develop a solid set of books for your business, because it will tell you whether or not you need to file bankruptcy or which type you should file. If your accounting has fallen behind because of the problems you've been facing, you'll need to catch it up to ensure you're looking at the right figures. But don't just trust what your tax return says - most tax documents will depreciate your equipment's value on a standardized schedule. A quality equipment appraisal will allow you to determine the exact amount your assets are worth. If they're worth more than you had thought, you may be able to get a line of credit or make some changes to keep your business afloat.

Chapter 11 - Reorganization

If you think that with a little breathing room, you could turn your business around, filing for Chapter 11 could be a good alternative to completely giving up the business. During this type of reorganization process, the business' assets are placed into an estate or trust created by the court, with the business owner having the use of them during the reorganization period. This type of legal set up allows business owners to continue using the equipment for production while still ensuring that the interests of any creditors is also protected by removing legal ownership from the hands of the owner. If you have equipment that is being threatened with repossession which you either have equity in or need to continue production, this action can protect your use of the equipment.

Chapter 7 - Discharge of Debts

If you feel, even after looking at the updated books and machine valuation, that the business is simply not salvageable, a Chapter 7 filing may be the route to take. In this type of action, the business actions are discontinued and a trustee is appointed to ensure the business' assets are liquidated in an orderly fashion to pay any creditors. An accurate machinery valuation helps estimate the value of the machinery assets of your company, helping the trustee determine how much each creditor will receive.

Dealing with bankruptcy is a difficult time for business owners, but it's one that can be made lighter by hiring the right equipment appraiser. If you're still looking for the right company to provide your bankruptcy machine appraisal, please contact us today. At Equipment Appraisal Services, our experienced, certified machinery appraisers are ready to help you document the value of your assets with quality work and a solid methodology.