In general, the evaluation processes follow the standards determined by the ABNT (Brazilian Association of Technical Norms), more specifically in its standard No. 14,653 – part 5, which addresses the evaluation procedures for machinery, equipment, installations and industrial goods.
This standard defines the value standards and approaches to valuation, as well as determines the practices and procedures for the standardized valuation of this class of assets.
The direct benefits of machine valuation are those linked to the use of information collected in the valuation, which meet specific demands such as: adaptation to accounting standards, legislation or court orders.
In this regard, it is possible to mention the adequacy of the company's controls in relation to the accounting treatment of its fixed assets, which is determined by the Accounting Pronouncement Committee No. 27 (CPC-27), where the main point of attention concerns the componentization of the fixed assets.
In summary, CPC-27 determines that assets must be controlled and depreciated according to the useful life of their components, whenever applicable. This brings us to the concept of machines and equipment, where machines are devices composed of one or more pieces of equipment that work together to perform specific functions. Therefore, it is correct to state that, according to the aforementioned technical pronouncement, all machines must be treated in accordance with the equipment that composes them.
An example of a suitable componentized treatment is an ambulance and its different patient support systems, where the main asset (vehicle) has secondary assets, or child assets, and each of them is treated for their respective acquisition values, economic useful life, residual value and book balance.
The correct componentization of assets allows write-offs and new activations, which occur due to operational needs, to be correctly treated in the analytical fixed assets and accurately reported in the financial statements. In this way, efforts to reorganize the control of property, plant and equipment are preserved, mitigating the need for periodic inventories and reconciliations.
In addition, the use of economic useful life, in line with the CPC-27, has the benefits of: (i) reducing any questioning by the authorities regarding the deductibility of depreciation expenses and; (ii) more accurately ascertaining the Company's results and, consequently, the potential for payment of dividends
Another direct benefit of the results of the equity valuation is the maintenance of insurance values within the correct levels by mitigating the payment of insurance premiums above what is necessary and ensuring that the total in coverage is consistent with the value of the insured assets.
For the assessment, it may be necessary, or desirable, to carry out inventories. However, this step is not mandatory and should only be performed if its need and applicability for the acquisition of information for the assessment is identified.
On the other hand, the indirect benefits of the evaluation of machines result from the impacts of the perception of control on the part of all actors in the industrial plant, such as workers and service providers, and those in charge of the company's management.
The main one is the awareness of active control processes in the organization, which significantly reduces material embezzlement. As control increases, embezzlement and theft events are reduced, due to the increased perception of detection risk.
Another indirect benefit is related to decision-making processes, where knowledge of the fair value of the main assets is important information for the correct understanding of possible scenarios, and to support any transactions.
By expanding knowledge about the advantages and rules that govern the practices, the valuation process of fixed assets becomes even more effective considering field inspections and interviews with management and operation teams so that the degrees of impact of use and maintenance of the equipment being evaluated could be established.
We have a multidisciplinary team with experience in the valuation of complex industrial assets and prepared to identify latent demands of your company and its stakeholders in meeting regulatory obligations.
Discover our approaches in Fixed Asset Management and Valuation
Grant Thornton uses cookies to monitor the performance of this website and improve user experience
To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.