APPRAISAL OF MACHINERIES

AND EQUIPMENT

GROUP 1
APPRAISAL
is defined as the act or
process of estimating value.
 ROLES OF APPRAISAL &
APPRAISERS:
A client asks for an appraisal the client has
a decision to make, which are:

- It answers questions
- It is a choice to make, or a
course of action to choose
 VALUATION OF MACHINERY &
EQUIPMENT
It is the evaluation or re-
evaluation of the value of
machinery and
equipment.
PURPOSES OF THE PRICE APPRAISAL
OF MACHINERY AND EQUIPMENT
New procurement, pledge, liquidation, transfer.

Mortgages, bank loan guarantees.

Purchase,sale,merger,capital contribution, joint

venture,investment, equitization.
 Appropriate valuation method in Appraisal
method of Machinery and order are based on the
following factors:

Machinery and equipment are new assets or used

assets

The relevant source of information

DEPRECIATION
Accrued depreciation
includes any and all loss of
value however caused.
In estimating depreciation,
consideration shouldgiven to :

Condition
Age
Conditions of operation
Inadequacy
Obsolescence
PROCEDURE IN MACHINERY
AND EQUIPMENT

1.FIELD INVESTIGATION
2.PRICING
a. To establish the quantities of the
various items of property

b. To determine the age and condition

of each item of property
c. To determine the technical specification
of the property to such an extent as is
adequate for the complete identification of
the various elements of costs

d. To facilitate reconciliation with the

company records.
Machinery & Equipment
Facility available for production 
MACHINERY
Encompasses Man–made mechanical
devices, usually powered, which are
designed to create a product or in some
manner alter the state of a material or
partial product.
MACHINE
Derived from the Greek
word “💪”which
connotes expedient
needs.
EQUIPMENT
All machinery and other apparatus
or implements used in an operation
or activity.
Machineries and Equipment
Also referred to as business
personal property.

Business personal property is the term

commonly used in property tax
assessment.
 Why is it necessary to have
machinery and equipment appraisal?

o Finance
o Purchase Price Allocation
o Litigation
o Property tax
o Divorce
 Why is it necessary to have machinery
and equipment appraisal?

o Charitable Donation
o Purchase Negotation
o Buy/Sell Agreement
o Establish Depreciation Schedule for
Income Tax Purposes
o Internal Financial Reporting
COMMON DEFINITIONS OF
VALUE FOR MACHINERY &
EQUIPMENT
It can be valued through the
basis of removal or basis of
staying in place.
The following definitions of value were adopted by the
Machinery and Technical Specialties Committee of the
American Society of Appraisers on July 25, 2010.
o Reproduction Cost New
o Replacement Cost New
o Fair Market Value
o Fair Market Value in Continued Use with Assumed
Earnings
o Fair Market Value in Continued Use with an Earnings
Analysis
o Fair Market Value – Installed
o Fair Market Value – Removed
o Liquidation Value in Place
o Orderly Liquidation
o Forced Liquidation Value
o Salvage Value
o Scrap Value
APPRAISAL
INTERVIEW
PROCESS
SCOPE OF WORK
SCHEDULE AN ON SITE INSPECTION
SALES COMPARISON
COMPLETE COST APPROACH
UTILIZE INCOME APPROACH
DATA COLLECTION AND ANALYSIS
ESSENTIAL ELEMENTS OF A CREDIBLE
APPRAISAL REPORT
 A complete description of the property in sufficient
detail to identify the machinery and equipment (may
include photographs).
 Methods of analysis and data used to provide a
value conclusion and the rationale for value.
 A signed certification similar to the one included in
USPAP which includes a statement that the appraiser
is not biased and does not have a present or
prospective interest in the property.