Equipment Appraisal Blog | Understanding Machinery Appraisals

Material Handling Equipment Valuations - Why Many Companies Need Them

Posted by Equipment Appraisal Services on Mon, Jan 11, 2021 @ 08:00 AM

Material Handling Appraisal

 

Virtually every business in the world that manufactures, transports, warehouses or otherwise supports any tangible product needs some type of material handling equipment to manage their inventory. It is important to understand the value of these types of assets when considering any financial transaction within your business so you can be sure to get the most benefit from the utilization and strength of these long lived machines.

What Types of Machinery are Considered Material Handing?

The first thing that comes to mind when discussing material handling for most businesses is forklift trucks. Forklifts are the most common type of equipment that falls into the material handling category, however, there is a considerably diverse amount of lift equipment that belongs as well.

Forklift Trucks

Forklift trucks alone have an immensely broad range of sizes, builds, and other specifications which can be overwhelming and fall into different categories of material handling. From the smallest manual pallet jacks to the largest type of container handler, there are hundreds of makes and models in between. From lifting a 500 lb. box to a 90,000 lb. shipping container, these types of assets are critical to effectively moving product from place to place.

The most common types of forklift trucks you see generally range from 3000-15,000 lb. capacities and are used in and around warehouses, loading docks and shipping centers. The lifts can be powered by rechargeable battery, propane gas, or diesel. Several domestic and international manufacturers compete in the industry, many with solid reputations for quality, producing long life durable machinery. Even if you have a 20+-year-old forklift, as long as it has been well maintained throughout its life, you can expect it to hold value over time.

What are Other Types of Material Handling Equipment?

The answer to this question may be a little subjective depending upon the industry or business you work in. I would consider these types of equipment to be included:

  • Order Pickers
  • Narrow Aisle Reach Trucks
  • Automated Pick & Place Retrieval Conveying Systems
  • Bulk Processing Equipment (Including Conveyors, Hoppers, Elevator Lifts & Augurs)
  • Pallet Racking, Shelving & Related Storage Equipment
  • Aerial Boom Lifts
  • Certain Types of Cranes

Similar to forklift trucks, these assets are typically long lived and hold their value well over time.

In summary, always consider material handling machinery & equipment as part of your asset listing when you need an updated appraisal. When deciding to engage a professional for this task, the best choice is an accredited ASA appraiser.

Tags: valuation, forklift appraisal, certified appraisal, material handling equipment

Benefits of a Forklift Appraisal in a Business Sale

Posted by Equipment Appraisal Services on Thu, Oct 01, 2015 @ 03:30 PM

When you're considering selling your business or undergoing a merger, how do you protect your business interests? Do you want a low valuation so you pay less in taxes over the transaction or a high valuation to get the most out of the sale or merger? Let's take a good look at the process through the eyes of the seller and the buyer using the example of a forklift appraisal.

The Seller's Standpoint

When you're selling your business, you want to get as much as possible out of it without having to pay more in taxes. This means you want a lower machinery valuation. If an equipment appraiser "offers" to give you a lower machinery appraisal, then they're probably not using the proper standards to meet legal requirements for a variety of applications. Even worse, if you suffer a loss during this time, you may have a hard time justifying a replacement cost that is significantly higher than your forklift appraisal has shown. Getting quality equipment appraisals will protect you from these types of losses by providing an unbiased equipment appraisal based on the Uniform Standards of Professional Appraisal Practice (USPAP).

The Buyer's Standpoint

By comparison, the buyer wants to have high equipment values because it gives them a significant amount of cash to depreciate from fair market value on their tax returns. A machinery and equipment appraisal that is unusually high also has drawbacks, however. If a machine appraisal is performed that gives too high a value and is not backed up with USPAP appraisal methodology, it may not stand up in legal circles. If you had a similar loss as mentioned above and the forklift appraisal reflects too high a price without the backup of the proper USPAP methodology, your insurance company could refuse to cover the loss. Also, because depreciation is being used on tax returns, you could face charges of being guilty of tax fraud because you've chosen to use inaccurate methods.

How a Proper Forklift Appraisal Meets the Need

A machine appraiser who is ASA certified provides proper documentation of the machinery's actual value in a method that will stand up legally for a variety of uses, whether it's business financing, tax assessment appeals or lawsuit requirements. It also provides a valid point for negotiations during a business sale or merger. Having a proper forklift appraisal provides an accurate point to base financing on, to back up a personal property tax assessment appeal or show accurate bookkeeping and accounting to have a solid picture of your business' financial health.

Though we have discussed the needs from a "forklift" standpoint, all the reasons above apply to an type of machinery and equipment.

Tags: property tax, forklift appraisal