A common question that arises when a capital equipment appraisal is needed relates to determining whether the appraisers need to inspect the equipment. Depending on the availability of the data, quality of the data, and willingness of the parties to compile data, the appropriate scope of an appraisal may be a desktop appraisal. Desktop appraisals may result in cost savings for a client. Some factors to consider when assessing whether a desktop appraisal is appropriate are outlined below.
Desktop Appraisals are feasible if the following data is available or can be compiled:
- An accurate listing of the furniture, fixtures, and equipment to be valued. The listing of requested data may include: historical costs, dates of manufacture, and descriptions of each asset. Ideally, this listing would include a detailed depreciation schedule that ties back to financial statements (i.e., a balance sheet)
- Manufacturer and model number for the major assets
- Copies of invoices that are readily available for the major assets
- Photographs may be provided to confirm presence, quality, condition, and ancillary accessories
Disadvantages of Desktop Appraisals:
- Appraisers are usually unable validate the accuracy of the equipment listing
- Appraisers use pictures to assess the condition of the assets
- Burden is on the client or the client’s staff to compile the necessary data
- In certain transactions, auditors may require appraisers to perform a site inspection after a Desktop Appraisal has already been completed
The appraisal of capital equipment may be completed using a desktop approach or a site inspection. The advantage of having a desktop appraisal completed is that they can be completed without having to pay for an appraiser to travel to your site to inspect the equipment and, if the data is readily available, the turnaround time can be faster than a site visit. This can result in a cost and time savings for clients. However, desktop appraisals are not always ideal, and HAI makes recommendations based on the facts and circumstances of a specific assignment to help our clients make an informed decision regarding the scope of each appraisal.