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Reasons for Valuing Plant and

Machinery
Plant and machinery valuation is described as the process of estimating the worth of a plant and
machinery asset, undertaken by professional valuers. Plant and machinery include all assets or
devices used in all industry sectors for the production or provision of goods and services be it
construction, mining, manufacturing, food processing, hospitality and hospitals.

Plant and machinery valuation is undertaken for various reasons:


1. Buying
Buyers want to know the worth of the plant and machinery assets in order to make a reasonable
offer or bid. They need to ascertain whether the price tag of the plant and machinery assets they
are considering investing in, is reasonable and a true representation of its price.

2. Selling
Valuation is undertaken in order to come up with price of the plant and machinery assets. Here,
the professional valuers look for comparables of recent sale of plant and machinery assets of
similar make, capacity, condition and year of manufacture. Allowances are made for outstanding
features not prevalent on the subject plant and machinery assets to arrive at a fair price.

3. Equipment Financing
Equipment financiers need valuation on plant and machinery assets to determine the collateral
value which justifies the loan amount. Plant and machinery being financed through equipment
finance include heavy machinery, construction, manufacturing, transportation, IT and office
equipment.

4. Financial Reporting
Here plant and machinery valuation is required various financial purposes such as for balance
sheet; accounting; auditing and internal management. The bottom line is plant and machinery
assets are valued in order to determine the economic worthiness of the plant and machinery to
the company as part of an ongoing business concern.

Additional Benefits
Extra benefits gained along the valuation of plant and machinery assets include asset verification
and estimation of estimated remaining useful life of each plant and machinery asset.

A. Asset verification
This involves checking the existence of plant and machinery assets against an existing inventory
list.

B. Estimated Remaining Useful Life (ERUL)


Estimated residual life in years is determined for each machine during physical verification of
the plant and machinery. Physical life of machinery is often not the life which must be
considered in establishing the period up to which the machinery will probably be operated upon,
on an economical basis, the entire amount of depreciation should be written off during the
economic life for the plant and machinery.

Plant and Machinery Valuations Land sterling specializes in the valuation of plant and
machinery of all asset types across the industrial sectors for small, medium and large-scale
organizations in the Middle East and North Africa. Land Sterling valuers have an established
reputation with expertise and knowledge; give special attention to detail about each and every
plant, equipment or production line. Our valuation services are in compliance with international
valuation standards and utilizing best practice.