Fair Market Value: What do We Need to Know?
A plant and equipment valuation is a thorough and detailed calculation to determine the true monetary worth of your property, plant & equipment. Knowing the true worth of your assets can lead to smarter and more informed business decisions going forward. Valuation services in Melbourne can be hugely beneficial for many.
A highly qualified valuer who has undergone extensive training and education prepares the certified report. Each one is created according to strict legislative and regulatory requirements, and a recognised standard of legitimacy is attached to each report.
As plant and equipment valuations require specialised expertise, only Certified Practising Valuers (CPV) of Plant & Machinery (P&M) may take on these complex valuation tasks. With wide-ranging knowledge and vast experience, property experts can prepare accurate and detailed P&E valuation reports.
How do I value my equipment?
For those looking to know the true value of their business's fixed assets, the first step is to reach out to a registered and independent P&E valuation firm.
By doing so, you are guaranteed a reliable standard of precision. Valuers maintain a high level of accuracy by using a few different tried and tested valuation methods. The most commonly applied plant and equipment valuation techniques are:
The Direct Comparison Approach
A method involving an extensive analysis of comparable sales within the area. Experts will review what similar assets and equipment are sold for to determine a foundational value. The assets will need to be of a similar age and condition while serving a similar purpose.
The Income Capitalisation Approach
Valuers will consider the income an asset produces within a year. The income must be continuous and not be via the sale or consumption of an asset.
First, a valuer will determine the net operating income. This is the amount of income produced in a year minus liabilities and taxes. The valuer then divides the net operating income by the capitalisation rate to reach a final amount.
The Direct Replacement Cost Approach
The valuer calculates what it would cost to replace the asset in the existing market to determine its value. To do so, the valuer will need to perform a thorough analysis of the subject asset. Experts will include the identification of the asset, the condition of the asset, the remaining useful lifespan, and the depreciation the asset has undergone overtime. The final value is the sum of the total cost to replace the asset.
The primary valuation method for specialised machinery and equipment is dependent on the purpose of the report. An expert valuer will base their report around the circumstances of the client to ensure every requirement is met.
Different types of valuation services
Registered plant & equipment valuation services can be wide-ranging and beneficial in a multitude of different circumstances. As each report is custom-made, valuers are careful to consider the needs of the client.
The most commonly requested plant and equipment valuation services are:
Asset valuations:
An asset valuation is a key part of asset management for any kind of business. The report will cover all of the necessary details of the asset and can be used for several reasons.
An asset valuation can be for several assets or a single asset, depending on the needs of the client.
Machinery valuations:
A machinery valuation is a specialised type of valuation where valuers carefully examine the ins and outs of all sorts of machines.
Highly qualified experts have enough skill to accurately examine even custom-made machinery. Whether you work in farming, construction, food processing, or media, a machinery valuation may prove beneficial.
Plant and equipment valuation:
A plant and equipment valuation is a thorough assessment of all a business’s fixed and tangible assets. The full-service valuation covers every detail needed and is tailor-made to meet the specific requirements of the client.
Plant and equipment valuations can give you a much clearer understanding of your organisation’s financial standing, and thus can lead to well-informed financial decisions.
Why get a plant and equipment valuation?
The independent and legally-recognised nature of registered plant and equipment valuations makes it a hugely beneficial service for many.
A few of the most common reasons individuals get P&E valuations are:
Pre-purchase/Pre-sale advice
Knowing the true worth of an asset or piece of machinery can help you make a well-informed decision regarding whether to sell or buy.
Tax Planning
Registered valuation services can lead to efficient and accurate taxation planning. As such, no issues with ATO are likely to arise in the future.
Resolving Disputes
In cases where two parties are locked in a dispute involving property, a registered valuation can lead to swifter and smoother dispute negotiations.
Insurance
For those who own property, a reliable insurance package is important. A registered valuation is important when applying for insurance as it affects the final coverage given.
Mortgage
Banks and financial lenders base loan approvals and the amount granted on the existing market value of the property.
Summary
A plant and equipment valuation is the most reliable way of assessing the true worth of your organisation’s tangible and fixed assets. This includes all forms of equipment and machinery contributing towards the daily functionality of the business.
The registered and independent nature of the report makes it hugely beneficial in a number of circumstances such as for tax planning, insurance purposes, and more. Each report is custom-made to suit the exact circumstances of the client.
Reliable plant & equipment valuation firms will offer asset valuations, machinery valuations, and full-service plant and equipment valuations. As only highly qualified professionals are hired to prepare these reports, an incredible standard of precision is met.
For more information on how plant and equipment valuations may serve to benefit you, feel free to speak to one of our highly qualified experts today.