ROLE AND PURPOSE OF EQUIPMENT VALUATION

1. The role of machine and equipment pricing

Machine and equipment valuation is the basis and essential foundation for the effective management of assets in general and machinery and equipment in particular. Machine and equipment valuation is the basis for making decisions related to new purchase, transfer of used machines and equipment, taxation, rental, insurance, mortgage, investment and reporting finance.

2. Purpose and value basis in pricing machine and equipment.

The pricing of machines and equipment is made for specific purposes and the re-pricing purposes are decided on the basis of market value or non-market value and thereby help the appraiser choose the valuation method. Price matching. Therefore, appraisers need to have a firm grasp of the pricing purpose through discussing with customers about the types of machines and equipment to be priced, using the valuation results for what, as well as based on experience, His knowledge and qualifications and full explanation and clarity in the valuation report.

a. Machine and equipment pricing purpose.

The pricing purpose influences the choice of the pricing base. Accurate determination of the purpose of pricing helps bidders to avoid choosing the incorrect basis, thereby applying improper valuation methods resulting in improper pricing for the requested purpose. Currently, the pricing of machines and equipment often serves the following purposes:

• Buying, selling, exchanging or leasing;
• Joint venture, association, bidding, auction, investment estimation;
• Mortgage;
• Tax;
• Accounting;
• Other purposes.

b. Value basis in the pricing of machines and equipment.

Like general asset valuation, machine and equipment valuation has two bases of value: market value and non-market value.

Valuers and users of pricing services must clearly distinguish the difference between market prices and non-market prices to ensure objective valuation results.

c. The relationship between the purpose and the value base in pricing.

The valuation purpose will determine the choice of the value base in pricing. When pricing machines and equipment, appraisers should pay attention to:

+ The valuation purpose must be clearly defined;

+ The purpose and basis of the applied valuation must be consistent with the provisions of the law;

+ The valuation purpose and the selection of the value basis for the valuation must be consistent with each other, here can prove this relationship as follows:

• For mortgages and public purchases and exchanges: The basis of valuation is market value.
• For insurance: The basis of the valuation is the non-market value, namely the cost of restoring the status quo or any other basis stated in the insurance policy, consistent with the insurance rules.
• For accounting and accounting: ordinary machines and equipment for the purpose of serving production and business activities, the basis of valuation is the market value of the residual use value; for specialized machinery and equipment not commonly sold in the market, the basis of pricing is non-market value (replacement cost - accumulated depreciation) - although this is non-market value, for pricing purposes for financial reporting purposes it is considered to substitute for market value, which is accepted as market value.
• For tax calculation purposes: The valuation base is the non-market value, specifically the valuation base is the state regulations related to the calculation of tax on machinery and equipment.