In what situations may require an assessment, examination of the property?
Situations in which you need to resort to the help of experts for the examination, arise in our lives constantly. Examination of the property may be needed if:
- It is necessary to find out the value of the business or its individual assets;
- get insurance;
- Examination, damage assessment in case of accident;
- To carry out the division of property in the event of a property dispute;
- To confiscate;
- make customs clearance;
- It is necessary to determine the amount of damage caused, etc.
Valuation of property for court:
Often, property valuation is sought in order to divide property by court. Such cases arise when relatives cannot decide on the share of inherited property or on the part of the property that they are entitled to after the divorce. Only a specialist can resolve this situation, because an assessment of this kind can be associated with partial concealment of the necessary documentation and with the occurrence of conflict situations.
Valuation of the organization
To carry out an assessment of the property of the organization requires the involvement of experts with specific qualifications. This assessment includes not only the assessment of real estate, but also the assessment of machinery and equipment. In turn, the assessment of machinery and equipment implies a determination of the cost of transport, furniture, office equipment, machine tools, appliances, etc. For such an examination, a thorough examination of a number of documents is required.
Monetary valuation of intangible assets:
The intangible assets include: literary, artistic and musical works, certificates of ownership of trademarks, computer programs, patents, various project documentation, etc. Such expertise may be needed when making sales transactions, when signing documents that allow the disposal of someone else’s intellectual property, as well as in determining the amount of damage caused by the illegal use of intellectual property.
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Forms of property valuation and conditions for deducting appraisal costs
Forms of valuation of property
An independent appraisal company carried out an assessment of property (movable and immovable) in connection with the production needs of the enterprise. The cost of property valuation was attributed by the enterprise to deductions for the period of the valuation. Did the company do the right thing, reflecting the cost of the assessment on the deductions of the period of its implementation?
Referring to the provisions of the Law “On Appraisal Activities” No. 989- XV of April 18, 2002 (hereinafter – the Law) and the Tax Code (hereinafter – the TC).
According to Art. 1 of the Law, appraisal is the process of determining the value of an appraisal object on a specific date, taking into account the physical, economic, social and other factors affecting the cost.
Assessing a property on a specific date when assigning expenses to it for tax purposes means using and accepting by a party or parties (users or users) its results, both in the tax period of its implementation and in the tax period following its period, depending from the goals and object of evaluation.
The company ordered a real estate appraisal for a loan.
According to the results of the assessment, the bank was unable to issue a loan to the company due to the lack of collateral in the amount of the loan requested.
In the same year (tax period), the company entered the investor to receive investments. The contractual condition for investing funds in an enterprise was to provide the investor with the market value of real estate by an independent appraisal company. The results of assessing the market value of the property (real estate), not previously used to obtain a loan, were sufficient for the investor and allowed him to realistically assess the value of the property and contribute the appropriate interest based on the value of the assessed property.
Example The purpose of the assessment is to use its results in planning the price and profit of the enterprise. The result of this assessment is to determine the market value of the property in a specific period and distribute its results to other periods, in comparison with other new enterprises and their property, to establish the price of future products tax periods. Such an assessment should be reflected in the accounting policies of the enterprise, in the purpose of ordering an assessment from the contractor (Appraisal Company) and in the contract for the provision of assessment services.
In the above example 3, assessment expenses are attributed to its tax period, just as assessment expenses for financial accounting are carried out at the estimated (revalued) cost of fixed assets and property collateral to the bank on the loan received in the tax period.