MACHINERY/ EQUIPMENT
APPROACHES TO VALUE
SALES
COMPARISON
APPROACH
relies on the assumption that the
value of the businesses' assets can be
obtained based upon transactions of
similar items selling in the secondary
or used market.
usually the comparable prices of
equipment need to be adjusted
for differences such as age,
condition, and capacity of asses,
model, location, date and type of
sale.
INCOME
CAPITALAZATION
APPROACH
value of an asset can be estimated
by the anticipated future benefit to
the owner.
not widely utilized by Machinery
and Equipment appraisers because
of the difficulty associated with
attributing a sites' or business'
income to individual assets.
properly applied, the income
approach can confirm or enhance
the credibility of the values arrived
at when using the Cost or Direct
Market approaches to value.
COST
APPROACH
based upon the assumption that a
purchaser would pay no more for
an asset than the cost of creating
a substitute with the identical
utility of the subject asset being
valued.
usually establishes the upper limit
of value
once replacement cost is
established, the condition needs
to be accounted for applying
accrued depreciation.