VALUATION CORP.
valuation & consulting in Russia

VALUATION Corp. Provides Machinery and Equipment Valuation Services in Moscow and Russian Regions


Equipment as Valuation Subject

In Russian valuation practice, any movable property is generally referred as “machinery and equipment” or simply “equipment”. Equipment here is used as the overarching term for various movable assets - industrial machinery, instruments, computers, vehicles, technological complexes and production lines, power units, office appliances, as well as personal movable property – furniture, home appliances and cars. Fixed (non-movable) equipment permanently attached to buildings or land (like lifting or air-conditioning machinery) also falls into this category.

Valuation of equipment in Russia usually is carried out using comparative (market) approach when the subject equipment is compared to the similar objects, which are sold on the market, while income and cost approaches are much less often used. In some valuations two or even three appraisal approaches can be used – in such cases the final value of the subject equipment is determined on the basis of comprehensive analysis of all value indicators obtained with the applied approaches.

Depending on purpose of valuation, the following types of equipment value are usually determined:

Liquidation value - is determined when the owner of the equipment is forced to sell his equipment during limited period of time, which is shorter than the usual period of market exposure when selling such equipment normally on the free market.

Investment value - is determined for a particular investor and is based on specific efficiency targets (individual characteristics) of the particular investment project set by the investor.

Market value – usually is determined for all other purposes.

Our Services

With a strong reputation built on more than 20 years of experience we provide machinery and equipment valuation services to our clients in Russia and internationally in a wide variety of situations when independent appraisal is required or desirable. Typical situations requiring valuation of equipment and machinery are considered below:

Selling and buying machinery and equipment.
Having independent professional advice on equipment value prior to concluding a buy-sell transaction is probably the most common purpose of equipment valuation in Russia. Although parties (buyer and seller) can determine the price themselves (unless otherwise is required by law), they often prefer to have the subject equipment professionally appraised in order to obtain an independently confirmed market price benchmark. This is especially true when the transaction is concluded between affiliated companies, because according to Russian law tax authorities have the right to control transactions between affiliated legal entities for compliance of transaction price with average market prices.
Learn more about valuation for buy-sell transactions...

Transfer of equipment as a non-monetary contribution to the charter fund (shareholders’ capital) of a Russian company.
When paying for his share in the shareholders’ capital (usually referred as “charter fund” in Russia) founder of a company can use money or make a non-monetary contribution. In case of transferring equipment as a non-monetary contribution from founder to the company, an independent valuation is mandatory by Russian civil law. It is possible to set off the subject equipment at a cost not higher than its market value, confirmed by an independent appraiser.
Learn more about valuation of non-monetary contributions to charter fund...

Determination of equipment value when importing it into Russia.
According to Russian law, import duties and taxes must be calculated based on market value of the imported equipment. When machinery and industrial equipment is imported into Russia, it is advisable to have its market value independently valued and present the valuation report as proof of fair market value of the subject equipment to Russian custom authorities. This might considerably speed up the process of custom clearance, especially for used equpment.
Learn more about valuation of equipment for importing into Russia...

Determination of asset’s initial book value in corporate accounting.
When equipment is discovered as a result of a recent inventory or when it is received free of charge from third parties, the accounting department must decide on the initial value of the subject equipment on a balance sheet. In this case, the simple solution is to have the value of the subject equipment professionally appraised by an independent valuer.

Revaluation of fixed assets for accounting purposes.
According to Russian bookkeeping standards, at the end of each calendar year, the book value of homogeneous groups of company’s fixed assets, including equipment, can be changed (revalued) based on a valuation report from an independent valuer.
Learn more about revaluation of fixed assets...

Use of equipment as collateral.
Almost all Russian banks require an independent valuation of equipment when it is used to secure a loan. In this case both market and liquidation value of equipment should be determined, because in the event of default, the equipment may be liquidated in order to quickly pay for the unsettled debt.
Learn more about valuation of collaterals...

Equipment write-off.
Outdated, broken beyond repair, obsolete equipment is usually written off or sold as scrap. Modern electronics and IT equipment (computers, mobile devices, office appliances and the like) are becoming obsolete especially quickly – usually that type of equipment has to be written off in 3-5 years. If the decommissioned equipment is not operational it is usually valued as scrap.

Determination of fair payment for equipment lease.
Equipment can not only be bought, but also leased. Prior to concluding a lease of equipment, it is advisable to conduct an independent valuation of the fair market amount of annual lease payment for using of the subject equipment.

For more information on our machinery and equipment valuation services, please contact us.

Information and Documents for Equipment Valuation

  1. Manufacturer's name.
  2. Model, series.
  3. Year of manufacturing.
  4. Serial number (if any).
  5. Inventory number (if the owner is a legal entity).
  6. Photographs of the subject equipment (if available).
  7. Information on book value and accumulated depreciation as of latest reporting date (if the owner is a legal entity).
  8. Description of technical condition of (operational or not, required repair, existing defects – in any).
  9. Information on previous major overhauls (replacements of main parts and assemblies, major improvements – if any).
  10. Technical specifications - capacity, weight, dimensions, mileage, output, etc. as per technical documentation – for unique (not mass-produced) equipment.

Depending on type of equipment and valuation purpose, the above list of information and documents may be reduced or expanded after our detailed review of the valuation assignment.



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