A plant and equipment valuation in NSW is a registered and independent assessment of the fixed assets of a business including all equipment, machinery, vehicles, tools, and more. It is the most reliable method of calculating the monetary worth of the tangible assets of your business.
These independent valuation services are performed by highly qualified professionals who have undergone extensive training programs.
The report has an attached legitimacy and stays valid for six months after completion. This means that it is accepted as a certified and official valuation of the property or assets, and can be used in a variety of legal, private, and business proceedings.
For business owners, knowing the existing value of your tangible assets is beneficial in many ways. By reaching out to a reliable valuation firm, you’ll gain a clear understanding of each of your assets’ value.
Who performs plant and equipment valuations?
Valuers with the necessary qualifications who are registered with the Australian Property Institute (API) may prepare independent valuation reports.
As plant and equipment valuations require specialised skills, only Certified Practising Valuers (CPV) of Plant and Machinery (P&M) can take on these duties.
Valuers follow internationally-recognised valuation standards and are sure to meet every legislative and regulatory requirement. Each report is custom-made to suit the needs of the client and the details included are dependent on the purpose of the report.
As registered industry experts, valuers must follow high standards of integrity, honesty, and transparency when preparing reports.
By regularly attending in workshops and training programs while staying aware of the existing market conditions, valuers have refined skill sets that allow them to perform precise valuations.
How do you evaluate plant and machinery?
Valuers follow a process of identifying the relevant assets, determining the condition and remaining useful life span, noting the depreciation rate, and estimating a replacement cost.
There are a few tried and tested methodologies that valuers apply when performing plant and equipment valuations. The three most common of these are the direct comparison approach, the replacement cost approach, and the income capitalisation approach.
The direct comparison approach
The asset is compared to similar assets that have recently been sold. The comparable asset must have similar characteristics and perform a similar function to the one being assessed.
Valuers reach a foundational value and make necessary adjustments in accordance with any notable differences between the assets.
The cost approach
This is often used as the primary valuation method for specialised equipment and machinery. Valuers consider what the depreciated replacement cost of the asset would be in today’s market. This refers to the estimated cost of replacing the asset with an asset that serves a similar function.
It’s an approach based on the idea that a buyer will not pay more for an asset and a seller will not accept less than the price of a similar asset on the market.
The income capitalisation approach
The valuer carefully considers the future income that the asset may generate when determining its current value.
The potential financial benefit of the asset is assessed, and the valuer divides the net operating income by the capitalisation rate to reach a final amount.
The benefits of plant and equipment valuations
You may be wondering in what situations such a detailed valuation report can be of assistance. The benefits of independent and registered P&E valuations are wide-ranging and can make life significantly easier in a number of circumstances.
A few of the most common ways in which plant and equipment valuations can benefit you include:
Knowing the true worth of your assets
An accurate assessment of the value of your assets is useful in several ways such as for selling the business, securing finances, and outlining the value of insurance policies.
Identifying underperforming assets
A plant and equipment valuation can help you identify underperforming assets. As such, business owners and managers can make more informed decisions regarding how to allocate the company’s resources.
Planning for the future
By identifying the remaining useful lifespan of assets and outlining depreciation rates, a business can reliably plan for the future with all of the above in mind.
Supporting insurance coverage
A independent P&E valuation can help a company ensure that their valuable assets are sufficiently insured in the event of loss or damage.
Facilitating a division of assets
There may be cases where partnerships, either personal or professional, break down and come to an abrupt end. In such cases, a fair division of the assets is needed to ensure both parties are fairly compensated.
Assisting with estate succession planning
Getting a valuation of your assets can help individuals and organisations carefully plan for the transfer of assets from one generation to the next.
Summary
A registered and independent plant and equipment valuation service is the best way to get the true value of your assets in the existing market conditions. They are performed by uniquely qualified individuals with vast experience in the industry.
By rigorously following international valuation standards, property experts can prepare accurate and reliable valuation reports in line with all the relevant regulatory requirements. Certified Practising Valuers (CPV) of Plant and Machinery (P&M) custom-make each report to suit the client’s needs.
An independent valuation has a wide variety of benefits, from efficient asset management to guaranteeing a fair division among former partners. Valuers have the experience to assess all sorts of assets for all sorts of organisations and purposes.
For more information on the benefits of plant and equipment valuations, speak to one of our highly qualified experts today.