Machinery Valuation

NatsmommaNatsmomma Feels At HomeRegistered Posts: 39
I have a new client who is a blacksmith. He resurrected his business in 2013 and I'm just finalising his first set of accounts. He is a sole trader who occasionally employs a mate on an ad hoc basis for larger projects. He has a large stock of old artisan machinery, such as bond saws, forge equipment, woodcutters and lathes. Many of the items are antiques or unique as he has collected them over the last 15 years or so from auctions and sales.

My issue is the valuation of the machinery. I asked him to compile a list and be honest about the value he would expect each piece to fetch on ebay. The total comes in at £26k. I have discussed some of the larger items with him and cross-matched them on ebay and his valuations seem pretty accurate. I have also visited his workshop to see the items for myself and know that they are there.

Should I insist on an external valuation for the purpose of his accounts? What do others do in this situation, please? HIs turnover was £78k for the year so the £26k valuation is material.

Thank you in advance :-)

Comments

  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,440
    Hi valuation seems reasonable if you have checked it out. Some businesses simply just have higher start up costs. Don't forget no AIA on assets from related parties so WDA's only.
    Regards,

    Burg
  • NatsmommaNatsmomma Feels At Home Registered Posts: 39
    Thank you Burg, much appreciated. It's a confidence thing I think, this is the first time I've dealt with a sole trader bringing in assets to the business.
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