Equipment Appraisal Blog | Understanding Machinery Appraisals

Equipment Appraisers Can Value a Lot More Than You Might Think

Posted by Equipment Appraisal Services on Mon, Apr 03, 2023 @ 07:30 AM

Equipment Appraisers Furniture Fixtures Equipment Appraisals

When it comes to defining the term “assets” there are so many different types that it can be difficult to understand which belong in the various categories that appraisers are familiar with and can value based on their credentials and experience. Machinery & Equipment (M&E) appraisers have, by far, the broadest array of varying property types for which they may be capable of valuing.

The clear exceptions for M&E appraisers would be intangible assets, such as a company’s overall goodwill, customer lists, trademarks, patents, domain names, and the like; and real property, most commonly viewed as buildings, land, and their associated improvements. Other areas where different kinds of expertise are required would be gems and jewelry, fine art, antiques, and other collectible types of property.

Beyond these obvious distinctions, the vast majority of all other tangible assets could potentially fall under an equipment appraiser’s purview. Here are some examples that you might not have considered:

Tangible Personal Property

This is a very broad term that is intended to primarily distinguish an individual’s ownership vs. a business. Therefore, many of the asset types are the same as what an equipment appraiser would see in a company machinery appraisal. Items such as furniture, audiovisual equipment, trucks, automobiles, hobby shop equipment, and appliances are a few of these asset types.

FF&E

This term stands for furniture, fixtures & equipment. It is often considered a “catch-all” term that groups a company’s office equipment, such as printers & computers, as well as furniture, including desks, chairs, and filing cabinets together under one common category. Fixtures refer to those items that are removable properties and thus not considered a building improvement.

On-Hand Inventory

A company’s raw materials, finished goods, spare parts, tooling, and other types of on-hand inventory have tangible value to a business. It is common for machinery & equipment appraisers to educate themselves and understand reasonable approaches and techniques to value this kind of property.

In summary, if you own these kinds of assets, and need them appraised for any reason, your best bet is to consult with an experienced M&E appraiser and determine if they have the experience to get the job done.

Tags: machinery & equipment appraisal, accredited appraisers, FF&E

What does the term FF&E refer to in Valuation and Accounting Circles?

Posted by Equipment Appraisal Services on Mon, Aug 08, 2022 @ 07:30 AM

 

Machinery and Equipment Appraisals FF and E

The acronym FF&E is a familiar term in the business world, especially with appraisers and accountants, however, what the initials technically stand for and what they actually encompass can vary depending on one’s interpretation and usage.

The initials represent Furniture, Fixtures & Equipment, which is broadly defined as: “movable furniture, fixtures and other equipment that have no permanent connection to a structure or building.”

Anytime you see the word “other” in a definition, it can open the door to any number of slightly different meanings. Most often you will see it referenced in businesses where there is a heavy concentration of office equipment (computers, printers, etc.) and furniture such as desks, cubicles, credenzas, and the like. That said, there is nothing wrong with using the term to generally reference all the tangible assets owned by a business that do not include buildings, land, and their associated improvements (Real Property).

There are some flaws with the term and its definition, however. For example, the term fixtures actually mean property that is literally fixed to a building or related structure, which is the opposite of the first word “movable” in the FF&E definition. An oxymoron that contributes to the diversity of applications in which the term FF&E is applied.

A second example is that for many companies, office furniture and equipment is not a significant tangible asset on their books, while the “other equipment” represents a much more substantial asset group, often separated from the term itself.

Some of the more common businesses where you will see FF&E used as an all-encompassing term are: restaurants/bars; retail stores; markets; fitness centers; corporate workplace offices; salons; and related companies, where the machinery & equipment component is complementary to the furniture, removable fixtures, and other items used every day.

A restaurant for example, will likely have as much invested in the property found in the serving and dining areas as it does in the kitchen and backrooms. Therefore, all components of the FF&E are treated similarly.

In addition, businesses who lease their buildings instead of owning them will want to include the fixtures (leasehold improvements) as part of the personal property on the books since they can be treated as an owned asset and depreciated. Using the restaurant example again, many business owners will spend a lot of money in the early stages of operation to improve and convert the property to fit the needs of their unique design and layout.

In summary, the term FF&E is commonly used in both the valuation and accounting realms. This acronym is subject to a wide variety of definitions given its nature, and there is nothing wrong with the varying ways by which it can be treated, as long as it is specifically defined by those using it.

Tags: Machinery & Equipment Appraisals, FF&E