Plant and Equipment Valuation 

An equipment in this context is an item that serves a certain specific purpose such as computers, printers, a washing machine etc. while a plant is a combination of buildings, machines and

apparatus where industrial activities take place an take this cement grinding plant as an example.

Plant and equipment are considered assets and the basis of valuation borrows heavily from that of Real Estate.

Asset valuation is a mode used by appraisers and valuers to determine the current market value of an asset.

It applies the use of opinion pricing, price comparison method as well as the book value.

For the most part this kind of valuation is accompanied by Asset tagging, the formulation of a software to generate bar-codes to be placed on the assets for records.

Its always good to do a reconnaissance and create a list of all items to be valued and indicate their specific locations such as  room numbers.

Value Assumptions 

Book value- Actual cost or price of acquiring the asset. This will be provided by the accounts manager of the company. It best applies when an asset has been acquired very recently and or is of a unique design whose comparable is not readily available.

Comparable method- It involves seeking prices of similar assets, sourcing compara

ble from the manufacturers and depreciation it will give reliable figures.

Opinion pricing – This should be the last recourse of a valuer, the Insurance company or the firm’s board might require the valuer to defend their values. Defending might at times be opinions is quite heavy.

This can be applied when a valuation is to be done on an asset with limited manufacturers and very rare or no price related info. For instance this fully armored bulletproof Toyota V8 donated to a CEO of a private company by a European Government,since there’s no definitive way to ascertain its value, an opinion based value is acceptable.The value will definitely be nothing close to that of a normal V8 and any comparable will therefore be insignificant in this case.

Fixtures  and other fittings such as wall-to-wall carpets are dependent on the building and tend to drastically loose value when moved or taken down. Cost of installation per square meters/foot is gotten from local contractors.

Brand manufactures for electronic devices such as Phones,laptops, microwaves etc. have a tenancy of advancing versions periodically. Every update continues to push the last one towards obsolescence which also reflects on the value.

Challenges to Expect

It is not easy to ascertain the machine productivity of all assets especially construction machines which might externally appear to be in good condition but have mechanical issues that cause it to stop through its job say every 1 Hour.

Most tangible assets are movable and one might easily leave out or duplicate assets such as chairs since they keep getting moved around by employees or even students in the case of schools. Vehicles may be in use during the inspection time.

Fundamental information such as date of purchase might be miscommunication hence misleading  estimates.