STANDARD DEFINITIONS FOR MACHINERY AND EQUIPMENT APPRAISALS
Click Here for Printer Friendly Version- 1. REPRODUCTION COST, NEW
- A professional opinion of the cost of reproducing a new replica of a property on the basis of current price with the same or closely similar materials, as of the effective date of this appraisal report.
- 2. REPLACEMENT COST, NEW
- A professional opinion of the current cost of a similar new property having the nearest equivalent utility as the property being appraised, as of the effective date of this appraisal report.
- 3. REPLACEMENT COST, USED
- A professional opinion expressed in terms of money, which the subject machinery and equipment would cost if it could be replaced by used machinery and equipment. Often, used machinery and equipment cannot be duplicated due to unavailability or model changes. Therefore, USED REPLACEMENT COST may reflect the appraiser’s opinion of replacement with machinery and equipment similar but not necessarily identical in model, functions or capacity. USED REPLACEMENT COST is F.O.B. Used Vendor’s facility or AS IS WHERE IS location of replacement machinery, as of the effective date of this appraisal report.
- 4. FAIR MARKET VALUE
- A professional opinion of the estimated most probable price expressed in terms of currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell, and both parties fully aware of all the relevant facts, as of the effective date of this appraisal report.
- 5. FAIR MARKET VALUE IN CONTINUED USE
- A professional opinion of the estimated amount, expressed in terms of money, that may reasonably be expected for a property in an exchange between a willing buyer and a willing seller, with equity to both and neither parties under any compulsion to buy or sell, and both fully aware of the relevant facts, including installation, as of a specific date, and assuming that the earnings support the value reported, as of the effective date of this appraisal report. (This amount includes all normal direct and indirect costs to make the property fully operational and may not readily pertain to aircraft.)
- 6. FAIR MARKET VALUE — INSTALLED
- A professional opinion of the estimated most probable price, expressed in terms of currency to be realized for an installed property in an exchange between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell, and both fully aware of all relevant facts, as installed for intended utilization, as of the effective date of this appraisal report. (This amount includes all normal direct and indirect costs, such as installation and other assemblage costs, to make the property fully operational but does not have to be supported by the business earnings.)
- 7. FAIR MARKET VALUE — REMOVAL
- A professional opinion of the estimated amount, expressed in terms of money, that may reasonably be expected for a property, between a willing buyer and a willing seller, with equity to both, neither under any compulsion to buy or sell and both fully aware of all relevant facts, as of a specific date, and assuming that the earnings support the value reported, considering the cost of removal of the property to another location, as of the effective date of this appraisal report. (This includes all normal direct and indirect costs to make the property fully operational.)
- 8. LIQUIDATION VALUE IN PLACE
- A professional opinion of the estimated gross amount expressed in terms of money that could typically be realized from a failed facility, assuming that the entire facility would be sold intact within a limited time to complete the sale, as of a specific date and as of the effective date of this appraisal report.
- 9. ORDERLY LIQUIDATION VALUE
- A professional opinion of the estimated most probable price, expressed in terms of currency, which the subject equipment could typically realize at a privately negotiated sale, properly advised 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 this appraisal report. 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-where-is” basis 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.
- 10. FORCED LIQUIDATION VALUE — (AUCTION)
- A professional opinion of the estimated most probable price, expressed in terms of currency, which could be typically realized from a properly advertised and conducted public auction sale, held under forced sale conditions and under present day economic trends, as of the effective date of this appraisal report. Conclusions taken into consideration are the 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 piece-meal “as-is-where-is” basis 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.
- 11. DESKTOP OPINION
- A professional opinion of the appropriately defined value, expressed in terms of currency to be realized by the sale of assets, in which the opinion is generated from the list and/or other informational materials supplied to the appraiser and evaluated without the benefit of an actual on site inspection. This opinion is not recommended for use in the credit divisions. A desktop opinion should be used to determine the need for an appraisal or the scope of an appraisal.
- 12. SALVAGE VALUE
- A professional opinion of the estimated amount, expressed in terms of money that may be expected for the whole property or a component of the whole property that is retired from service for use elsewhere, as of a specific date and/or the effective date of the appraisal report. (See Note 2 Below)
- 13. SCRAP VALUE
- A professional opinion is the estimated amount, expressed in terms of money that could be realized for the property if it were sold for its material content, not for a productive use, as of a specific date and/or the effective date of this appraisal report.
- 14. INSURANCE REPLACEMENT COST
- A professional opinion of the replacement cost new as defined in the insurance policy less the replacement cost new of the items specifically excluded in the policy, if any, as of a specific date and/or as of the effective date of the appraisal report.
- 15. INSURABLE VALUE DEPRECIATED
- A professional opinion of the insurance replacement cost new less accrued depreciation considered for insurance purposes as defined in the insurance policy or other agreements, as of a specific date and/or as of the effective date of the appraisal report.
- 16. FAIR VALUE
- A professional opinion of the estimated most probable price, expressed in terms of currency to be realized for an installed property in an exchange between a willing buyer and a willing seller, with equity to both, neither party being under any compulsion to buy or sell, and both fully aware of all relevant facts, as installed for intended utilization, as of the effective date of this appraisal report. (This amount includes all normal direct and indirect costs, such as installation and other assemblage costs, to make the property fully operational but does not have to be supported by the business earnings.)
