Equipment Appraisal Blog | Understanding Machinery Appraisals

Dealing with a Business Loss: Retrospective Appraisals

Posted by Equipment Appraisal Services on Tue, Jan 23, 2018 @ 02:34 PM

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Your workshop catches fire and burns the equipment that was stored or used within. A hurricane floods your office and destroys both the maintenance records and the vehicles that were kept on site. A vandal breaks in and causes irreparable damage to your machinery over a late night or long weekend. Whatever situation you find yourself in, one of the thoughts that may raise your stress levels is how to prove the value to your insurance company. Here's a look at how retrospective appraisals can help in these difficult circumstances.

Dealing with a Business Loss: Retrospective Appraisals

How can an appraiser determine the value of equipment that has been significantly damaged? Though some of the process may involve some level of educated estimation, most of it is grounded solidly in appraisal practices and methods. Some information will be easily obtained, while other information will require careful study of what's left and any paperwork that is left after a disaster.

Let's take the example of a cargo van that has been burned in a warehouse fire and had significant damage due to the heat involved. Most business owners and equipment operators, even many mechanics, would only see the burned shell of the van. Fortunately, equipment appraisers take a different view of the machinery they're appraising.

To start, the appraiser will work with any paperwork and information that is available.  The original purchase paperwork, maintenance logs, receipts from repairs: all these papers paint a picture of what kind of van it was, the care it was given over the years and possibly a record of how many miles it had on it at the time of the loss. This information allows the appraiser to calculate the cargo van's value in general terms, based on the market conditions and demand for that type of vehicle.

But what if the van had been poorly used over the years? What if there was unrepaired body damage or significant problems with its mechanical systems due to being neglected or abused? On the other hand, what if it had much lower miles than most vehicles of that age and was maintained in impeccable condition? What if the business had added machinery or options to the vehicle that would increase its overall value? These are all aspects the equipment appraiser must take into account when calculating the value of a piece of equipment after a loss.

Another area to consider is when the damage took place. If the van was stored at a remote site and the damage was discovered months after the fact, how do you determine value? What if the bottom has fallen out of the van market in the intervening weeks and months? Should the van be appraised at the value it held when the damage was discovered or at the estimated time of the the loss? An equipment appraiser can retroactively value the machinery to the loss date using verified, tested appraisal methods.

Having to deal with a business loss is stressful, but having the option of getting retrospective appraisals performed on damaged equipment helps reduce the load. Whether you're claiming a loss on tax returns or pursuing compensation from your insurance company for the damage, a retrospective appraisal can help your business get back on its feet faster. Make sure you work with certified equipment appraisers, as the methodologies they use will hold up well against scrutiny in court, insurance and tax agency circles.

Tags: Equipment Appraisal, retrospective appraisals

Reasons for Retrospective Appraisals

Posted by Equipment Appraisal Services on Tue, Feb 23, 2016 @ 10:00 AM


Oops! When you've made a donation, are involved in litigation or have had an insurance loss, there's nothing quite as concerning as realizing that you needed to have equipment appraisals performed after the fact. How do you fix this problem? In this article, we'll discuss retrospective appraisals and how they can help you get the documentation you need to fix these troublesome problems. Here's how:

Documenting Donations

One of the most common areas where retrospective appraisals are used is in donations to non-profit or not-for-profit organizations that were not properly documented at the time. Especially when you're looking at taking a tax break for the donation, you need to have documentation to take the deduction. If the documentation was not prepared at the time of the donation by an equipment appraiser, it can be really difficult to otherwise prove the value of the equipment you donated. But at the end of your business year, your accountant informs you that they need you to provide supporting documentation for your donation. If you're stuck in this bind, you can still save the deduction by having a retrospective equipment valuation performed by a qualified machinery appraiser.

Proving Litigation

Another area where retrospective valuation can come into play is in litigation. One example of this is when going through a divorce where you need to buy out your spouse's interest in the business or prove that you're not hiding assets. Your spouse  may claim that you're undervaluing equipment that you've sold to keep things solvent while the transition is underway, because they want to get everything they can out of the buy out. A retrospective equipment valuation helps prove that your equipment was worth a particular amount prior to being sold, documenting that you were not hiding or undervaluing business assets.

Insurance Loss

When you've suffered a loss that sets your business back, it's upsetting when you realize you don't have documentation of your equipment values. Whether you're dealing with the fallout of a storm, a fire or a theft, documenting the value of your equipment is a vital part of the claim process. If you didn't have a machinery valuation performed ahead of time, you may be having a difficult time proving what the equipment was actually worth, especially when the equipment was customized or has unusual features that your insurance adjustor isn't familiar with. A retrospective machine appraisal helps prove the exact value of the machinery when the loss took place.

Tax Issues

What about when you're dealing with a tax agency? Equipment can lose value quickly at times, especially if it is in a struggling industry or when technology quickly changes. When a tax appraiser doesn't have a solid grip on the value of the machinery you own and just uses accounting depreciation, it's difficult to prove your side of the appeal without documentation. A retrospective valuation helps prove that the machinery was worth looking at market conditions, the condition of the equipment and similar elements that affect your machinery's final value.

If you find yourself needing to do the time warp to prove equipment values, a retrospective equipment appraisal can help document past value. At Equipment Appraisal Services, our job is helping you document equipment values, even after the fact. Please contact us today for help with your retrospective machine appraisal.

Tags: Litigation, Insurance Loss, donation appraisal, retrospective appraisals