It is very essential for certain businesses that involve plants and equipment to have accurate, comprehensive, and timely valuation of their properties.
A valuation for plants and equipment has several applications. It can be very instrumental for financial reporting, tax compliance, buy or sell decisions, collateral evaluation, and insurance.
Just like any other valuation reports, PE valuation undergoes a series of processes in order to come up with a comprehensive and reliable report. Here are the steps on plant and equipment valuation:
- Identify the assets to be appraised
- Define the purpose of the equipment appraisal
- Establish the equipment valuation date for the appraisal
- Determine the appropriate concepts and approaches to be utilized during valuation
- Determine the type of valuation study to be completed
- Select the type of equipment appraisal report to be provided
- Check the availability of data and information
A few approaches and methods are applied when doing plant and equipment valuation: cost and market approach. To give you an idea, here are two of the approaches that are commonly used for this kind of valuation.
- Market Approach – This one relies on the signs from the real market place in order to determine the value of a business. This approach entails the questions: What are other businesses’ worth that are similar to my business? It means that the basis of this approach depends on the price that a willing buyer will pay and a willing seller will accept for the business in the actual market. Market approach is a great way to determine the fair market value.
- Cost Approach – It is a valuation method that theorizes on the concept that the price a buyer should pay for a piece of property should be equal to the cost to build or purchase an equivalent property. It requires certain assumptions like the availability of plants or equipment.
Aviso conducts plant and equipment valuation services in accordance with International Valuation Standard (IVS) 220 (Plant and Equipment) and International Accounting Standard 16 (Property, Plant and Equipment). Therefore, you can be assured that our outputs are well-researched, comprehensive, and reliable.
Our array of thorough processes, approaches, and methods can help you get the most out of your property. Talk to us today and learn more, because here in Aviso, we value beyond measure.
