• ORDERLY LIQUIDATION VALUE
    APPRAISAL (OLV)
  • A professional opinion of the estimated most probable price expressed in terms of cash in U.S. dollars which the subject equipment could typically realize at a privately negotiated sale, properly advertised and professionally managed, by a seller obligated to sell over an extended period of time, usually within six to twelve months, as of the effective date of the appraisal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered. All assets are sold on a piecemeal basis 'as is' with the purchasers responsible for removal of assets at their own risk and expense. Any deletion or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the price indicated.
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  • FAIR MARKET VALUE APPRAISAL (FMV)
  • A professional opinion of the estimated most probable gross dollar amount to be realized between a willing buyer and a willing seller, in the open market, assuming that neither party is under compulsion to buy or sell, both are fully aware of all relevant facts as of the date of the appraisal.

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DESKTOP OPINION (DO)

A professional opinion of value based on materials or information supplied to the appraiser and evaluated without the benefit of viewing the assets. It is also a tool to determine the need for an appraisal or the scope of an appraisal. Desktop opinions should clearly be marked as a "professional opinion" and stated that it is not an appraisal. A desktop opinion is used to determine the need for an appraisal or the scope of an appraisal.

DEFINITION OF VALUES

FORCED LIQUIDATION VALUE (FLV/AV)
AUCTION VALUE

No investigation has been made into title to property and all items listed are assumed to be property of the subject company. A professional opinion of the estimated most probable price expressed in terms of cash in U.S. dollars which could typically be realized at a properly advertised and conducted public auction sale, held under forced conditions and under present day economic trends, as of the effective date of the appraisal report. Conclusions taken into consideration are physical location, difficulty of removal, physical condition, adaptability, specialization, marketability, overall appearance, and psychological appeal. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers are considered. All assets are to be sold on a piecemeal basis 'as is' with purchasers responsible for removal of assets at their own risk and expense. Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the price indicated.

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NEW REPLACEMENT COST VALUE
APPRAISAL (NRCV)

A professional opinion of the amount it would cost, F.O.B. the
new manufacturers plant, to purchase a new item of like quality
and specifications in the open marketplace. When such an item is unavailable in the marketplace, the appraiser should use their best judgment in estimating a value as of the effective date of the appraisal.


 

 

APPROACHES TO VALUE

MARKET APPROACH

No investigation has been made into title to property and all items listed are assumed to be property of the subject company. One of the three recognized approaches used in appraisal analysis, this approach involves the collection of market data pertaining to the subject assets being appraised. This approach is also known as the the 'Comparison Sales Approach'. The primary intent of the market approach is to determine the desirability of the assets and recent sales or offerings of similar assets currently on the market in order to arrive at an indication of the most probable selling price for the assets being appraised. If the comparable sales are not exactly similar to the asset being appraised, adjustments must be made to bring them as closely as in line as possible with the subject property.

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COST APPROACH

One of the three recognized approaches used in appraisal analysis, this approach is based on the proposition that the informed purchaser would pay no more for a property than the cost of producing a substitute property with the same utility as the subject property. It considers that the maximum value of a property to a knowledgeable buyer would be the amount currently required to construct or purchase a new asset of equal utility. When subject asset is not new, the current cost must be adjusted for all forms of depreciation as of the effective date of the appraisal.

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INCOME APPROACH

One of the three recognized approaches used in appraisal analysis, this approach considers value in relation to the present worth of future benefits derived from ownership and is usually measured through capitalization of a specific level of income.This is the least common approach used in the valuation of machinery and equipment since it is difficult to isolate income attributed to such assets.

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DEPRECIATION

Defined as the actual loss in value or worth of a property from all cases including those resulting from physical deterioration, functional obsolescence, and economic obsolescence.

Physical Deterioration: A form of depreciation where the loss in value or usefulness of an asset is attributed solely to physical causes such as wear and tear.

Functional Obsolescence: A form of depreciation where the loss in value is due to factors inherent in the property itself and due to changes in design, or the process resulting in inadequacy, over capacity, excess construction, lack of functional utility, or excess operating costs.

Economic Obsolescence: A form of depreciation or loss in value, caused by unfavorable external conditions. These can include such things as the economics of the industry, availability of financing, loss of material and labor sources, passage of new legislation, and changes in ordinances.