When you have invested significantly into your machinery, you want to make sure that your investment is protected. Though many businesses will insure their equipment, proving the value of your machinery after a loss is important to making a successful claim. But what if you're not sure what the value of your machinery should be or are having problems proving that value? in these areas, a commercial appraisal is vital to help ensure your equipment remains an asset to your business. Here's a quick look at the benefits of such an appraisal on your machinery.
Why should you get a commercial appraisal on your equipment?
What is the equipment in your business actually worth? It's a common question, whether you're dealing with a tax assessment, securing a business loan or making an insurance claim. Unfortunately, the answer to that question can be difficult to prove. Whether you have purchased new machinery, purchased used machinery or need to document the value of machinery that has been in use for some period of time, documenting the machinery value is important for a wide range of situations. But how do you go about documenting that value to outside interests?
When you first acquire a piece of equipment, whether it's new or used, you'll need to enter that value into your books so that you can deal with accounting issues such as depreciation. But does that mean if you got a good deal on it that the machinery is tied to that specific value? Not necessarily. If it was and you suffered a loss, you may not be able to claim the machinery's full value to your insurance company. A valuation protects the machinery's actual value to your business rather than the cost to acquire it.
It also helps to document the value of the machinery for any number of reasons. A certified appraisal is completed using methodologies that have been tested in a wide range of circumstances over the decades, so such an appraisal can stand up well to strong scrutiny. It will allow you to use that value in financial, insurance, legal and tax agency circles to prove the machinery value.
If you have equipment that has been in use for years, it may have been completely depreciated and have a book value that is virtually nothing. However, the machinery may continue to provide strong service for years to come. How do you document that loss of production value when the equipment had no value on the books? Having a piece of older machinery appraised allows you to benefit when it has been lost instead of losing the production value of the machinery because you have no documentation of its value.
By taking the time to have a commercial appraisal performed on your equipment, you're able to better protect your investment. But not all appraisals are the same. Though it can be tempting to try to value your machinery based on market sales or the word of a sales rep, this type of valuation won't hold up well to the strong scrutiny that will come about in a wide range of circumstances. Fortunately, even if you've already suffered the loss of your equipment, a professional certified appraiser can still perform an appraisal to determine the value prior to the loss, making it easier for you to document your equipment's value.