March 28, 2012
by EquipNet News
In one of our last blog posts, “Protect Your Company from Liability with a Machinery or Equipment Appraisal,” we discussed the variety of professionals who will likely need a certified machinery and equipment appraisal (CMEA) at some point in their career in order to protect themselves from liability. In this post we’ll discuss why a business owner might need a CMEA.
There are a variety of instances when business owners should work with a professional appraiser, including if they are buying or selling machinery and equipment, if they are in the process of getting a business valuation, or if they’re looking to obtain funding.
When selling equipment, business owners need to be certain they’re not selling too low or pricing their machinery and equipment above the fair market value. Buyers need to know that they’re not paying too much to purchase the machinery and equipment, and a CMEA can help ensure that you know what your equipment is worth. In addition, the IRS requires buyers and sellers to agree on the value of tangible assets involved with a business transfer. They must allocate a particular value for tangible assets, as well as goodwill.
A Certified Machinery and Equipment Appraiser has the expertise, certification, and knowledge to conduct an independent, unbiased machinery and equipment appraisal. CMEAs abide by the regulations and ethics of the Uniform Standards of Professional Appraisal Practice.
If an appraisal is prepared by anyone other than a qualified appraiser, it won’t hold up to scrutiny from third parties, such as lenders, the IRS, attorneys, or a court of law, to name a few. They all require a USPAP-compliant, substantiated certified equipment appraisal. Check out The Asset Accuracy Resource Center for more information about appraisal and valuation services provided by EquipNet.
March 27, 2012
by Julie Baker
No company wants to be responsible for the repercussions of a deal gone wrong, and smart companies do everything they can to reduce their risk of liability. In any type of deal that involves machinery or equipment, a certified machinery or equipment appraisal can protect the companies involved from liability by providing everyone involved with a substantiated value of the equipment.
In an upcoming series of posts, we will discuss the situations in which a certified machinery or equipment appraisal can protect different types of parties from liability. We will discuss auctioneers, lenders, accountants, and business owners and how certified appraisals can help each one. Whether you provide services or benefit from them, our series will help you understand just how crucial a certified appraisal is.
If you are already sold on the importance of obtaining certified appraisals, and would like to know how EquipNet can help, take a look at The Asset Accuracy Resource Center to learn more about our appraisal and valuation services.
March 17, 2012
by Julie Baker
March 15, 2012
by EquipNet News
If a business owner is looking to sell manufacturing equipment or machinery, he/she needs to know three separate types of value that their assets could bring in the market – orderly liquidation value, forced liquidation value, and fair market value. The differences among these types of machinery and equipment asset valuations are dependent upon the situation of the business and the time frame in which the assets need to be liquidated. Recently, however, in certain markets there has been almost no difference between orderly liquidation value and fair market value due to sluggish market conditions.
Because there is such a large amount of equipment and machinery available in the market, buyers have more options than they normally would. Of course, there are other circumstances that determine the current value of equipment, such as in the case of custom machinery. And for that reason, potential sellers need to know what it’s all worth.
Some sellers, like those whose businesses are in dire circumstances, may be forced to sell and get the best price for the equipment as quickly as possible. However, for others who may not be in such a rush to sell, understanding the current types of equipment value can help them make better informed decisions about whether to sell now or not.
It is essential for business owners to know the value of their equipment, especially if they are looking to sell, so that they can receive the best possible price in the current market. Visit EquipNet’s Facility Closure Resource Center for more information.
March 14, 2012
by EquipNet News
Depreciation, from an appraisal perspective, is rather different than an accounting or finance perspective. If machinery or equipment is still functional, being used, or if there is an active market for similar types of equipment, it still has value. In accounting and finance, depreciation means the allocation of the cost of an asset over time. It is a way of allocating the purchase price of an asset across its useful life, which takes into account what is considered normal wear and tear over the life of an asset.
For an asset that is 20 years old, if the owner of the asset were to sell the asset, it would have some value. From an accounting perspective and for tax purposes, the value would be $0; but from an appraisal perspective, the value likely would be greater than $0. Depreciation with regard to machinery and equipment appraisal is the estimated decrease in value from the initial purchase price of an asset based on a number of criteria, including physical, functional, and economic factors.
It can be somewhat challenging to understand the differences between what depreciation means in accounting terms and what it means in appraisal terms. If you have questions or are looking to sell your machinery or equipment, it’s always best to speak to a professional certified machinery and equipment appraiser (CMEA) about the depreciation of your machinery and equipment.