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5 Steps to Machinery and Equipment Valuation

By July 5, 2018June 17th, 2024Blog2 min read
Steps to Machinery and Equipment Valuation

When your company deals with serious machinery, it’s important to know its value for insurance and tax purposes, right? Actually, there are a number of other reasons why appraising industrial equipment assets can help improve your company’s situation, flexibility and adaptability in the marketplace and most importantly, a company requires machinery and equipment valuation to sell, prepare to sell, purchase or confirm insurance of machinery.

Machinery appraisal helps provide you with an accurate assessment of the equipment’s real value. Here are the steps involved in the evaluation of machinery and equipment.

Step 1: Assessment

This is where the appraiser identifies who the client is, exactly what needs to be appraised, the purpose of the appraisal, intended use, and the definition of value.

Step 2: Collection

In this step, the appraiser collects information relevant to the valuation. He or she establishes and classifies each equipment asset, and describes each by specific characteristics like serial number, manufacturer, and hours/miles.

Step 3: Application

The appraiser determines which of the three approaches should be used — sales comparison, cost, or income —  and applies that to the valuation at hand.

Step 4: Valuation

Using the approach chosen in step 3, the appraiser develops an opinion of market value for the equipment.

Step 5: Wrap-Up

Finally, the appraiser will put together the appraisal report in accordance with International Standards of Valuation. After any reconciliations are made, the report is delivered to the client identified in step.

 By taking the time for appraising industrial equipment, you can learn a great deal about your machinery’s condition, performance and value. This, in turn, allows you to leverage that value and condition to your company’s best possible benefit and growth. But how do you start the process of having your industrial machinery appraised? Start by finding a certified equipment appraiser who has experience with your industry’s machinery. Certification ensures that the appraiser knows exactly how to determine your equipment’s value for your specific situation.