“Why would I need an appraisal for equipment I JUST purchased?”
This is a question many organizations ask. Companies assume that the purchasing price of a machine or equipment remains constant for a while, but this isn’t always the case.
There are many benefits of having equipment and machinery appraised right after a purchase.
Check them out:
Reset Market Value
The company which you purchased the machine from likely sold it to you at a point where the machine no longer had any book value for them.
For example, they may have switched their old excavator for a new one after their old one had completely depreciated in their books. But just because an old machine depreciates in your books, it doesn’t mean that it’s not functional. A used excavator has plenty of life on it. You may have bought it for a much lower price then it’s actually worth.
An appraisal allows you to reset a fair price of the machinery enabling you to claim depreciation on it. For the purpose of tax, determining equipment value is the initial step required to depreciate it overtime.
Insure The Item
Insurance is necessary to protect large investments like heavy machinery and equipment and in order to get such items insured, you’ll require an appraisal. Insurance will cover repair and replacement costs.
Qualified appraisers will set a fair market value on the machine so it can be properly covered by insurance.
Determine Replacement Cost
You may not want to think of replacement costs right after the purchasing of an expensive item, but smart business people are always prepared for the worst case scenario.
An equipment appraisal provides an estimate for the cost of repairs and replacement. If the worst does happen you’re better prepared for it.
Through an appraisal, you don’t just get a more accurate price of what the item is actually worth but you can get the price details of the various parts of the machine too. You’ll be able to make informed decisions about replacing different components of the machine instead of purchasing a completely new one: it helps save money in the long run.
Boost Business Value
On the surface, machine and equipment appraisals may look like a hassle but in the long run, they can actually boost your business value.
After conducting a complete business appraisal, you may find that the business is worth much more than you’d initially thought. This usually happens when the business is appraised at a greater value than the depreciated value.
Learn the true value of your business by getting the help of qualified machine and equipment appraisers.
Independent Appraisal Experts offer convenient nationwide appraisal services. Our user-friendly web portal provides clients with 24/7 access to previous orders and details inspection reports at much lower prices than our competitors.
