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Tangible Asset Valuation - Land & Building and Plant & Machinery

Tangible Asset Valuation – Land & Building and Plant & Machinery

Tangible assets are described as assets with physical form and value. Examples include property, plant, and equipment. Tangible assets are seen and felt and can be destroyed by fire, natural disaster, or an accident.

Tangible assets are further classified into;

Asset Types

  1. Fixed assets or hard assets are those held by a business for a long time and cannot be easily converted into cash. Fixed tangible assets are depreciated over a period of time. Example buildings, machinery, computer equipment, tools, furniture.
  2. Current assets or liquid assets are those assets that can easily be converted into cash and are in the business for a short period of time, generally less than or equal to one year. The liquidity of current assets is significantly greater than that of fixed assets. Example cash, cash equivalents, accounts receivable, stock inventory, short term investments

Valuing Tangible Assets:

1. Appraisal Method

Under the appraisal method, an appraiser is hired to determine the true fair market value of a company’s assets. The asset appraiser will assess the current condition of the assets, including the degree of obsolescence and level of wear and tear. Then, the appraiser compares these values to the values such assets can fetch in the open market.

2. Liquidation Method

The assets can be converted into cash. Thus, it is important for a company to know the minimum value it would receive from a quick sale or liquidation. An assessor is hired and determines the value that an auction house, equipment seller, or other bulk asset buyers would be willing to pay for such categories of assets as those owned by the company.

3. Replacement Cost Method

An insurer generally uses the replacement cost method to calculate the value of the asset for insurance purposes. It helps to determine how much it would cost to replace the asset.

Why Plant & Machinery Valuation is required?

Plant & Machinery Valuation may be required for a number of reasons including financial reporting, mergers & acquisitions, initial public offerings, distress sale/ acquisition, strategic sale/ divestment, litigation, insurance, etc.

Why RK Associates?

As part of a one-stop solution to clients, we provide plant & machinery valuation services such as commercial, retail, residential, hospitality, industrial, warehousing among others. All reports are prepared in accordance with both international and country specific guidelines. We’ve a proven history of more than 30 years working successfully in valuation.

There are a host of factors that affect the valuations including the age of machinery, make/ brand, presence of complementary machinery, ease of mobility, etc. Our experts consider all relevant factors to assign true market value to the assets.

Based on client requirements, we provide an accurate assessment of any plant & machinery assets in addition to land and building to provide an overall view of the fair value of relevant assets.

What Is Building Valuation?

Valuation of building is the method of calculating the current marketable cost of a building or any structure. Building Valuation depends on the type of structures, location, size, shape, and width of roads, frontage, types, and quality of building materials used, and the cost of these materials. Building Valuation also depends on the height of plinth, height of the building, thickness of its walls, and nature of structure (such as Load-bearing or framed structure).

The location of a building also plays an important role in deciding the value of a building. For example, a building located in a market area would have a stronger and higher valuation than the same building located in a residential area. Also, the buildings located in areas with proper municipal water supply, sewer, and electricity have increased values.

A building located on a freehold land generates a higher valuation amount compared to a building located on the leasehold land. The valuation of a building also depends on the demands for purchase which varies from time to time. More demands make the building more valuable.

The valuation in civil engineering also depends on the income the building can generate if let out. If a building is not let out, then 6% of the capital cost of the building is considered as the annual rent. It changes from time to time and location and depends on the prevalent market price.

What Is Land Valuation?

This method of valuation done according to the market price of that place and the norms and standards of property tax of that locality or area. A land valuation can be described as the technique by which the valuation of the land is ascertained.

Valuation of Large and complex infrastructure, industrial and specialized assets.

Infrastructure networks, such as for land based transport systems on land, represent vast investments, made over many generations by both public and private sector organisations. Infrastructure Assets (roads & civil infrastructure, ports, railways, airports, power & energy etc.) are necessary for maintenance and growth of any Country and in fact a key growth driver. Because of its nature, Infrastructure is capital intensive and requires significant investments from the Government and Private Sector and also in the form of Public Private Partnerships (PPP).

We can help you in:

 

RK Associates have rich experience in providing valuation services to a range of infrastructure sectors including roads & civil infrastructure, ports, energy, utilities (power, water and waste) etc. using Project and Company Valuations approaches.

We have the capacity and experience to value these infrastructure and specialized assets. We have valuations teams for Plant & Machinery, Land & Building and Securities & Financial Asset classes and also Technical experts from Industry to judge the Assets at ground level.

 

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Email Us : valuers@rkassociates.org
Call Us : (0120) 4110117, 4324647, +91-9958632707
Address : D-39, 2nd Floor, Sector-2, Noida-201301

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