IBBI Plant & Machinery key terms

The apparatus, machinery, and equipment used in a business process to produce goods or services, distinguished from the building or land that houses it.

Assembled mechanical devices with moving or powered parts that perform work, often treated separately from structures for valuation and depreciation purposes.

Items attached to land or buildings that become part of the immovable property, such as built-in tanks or overhead cranes, and are valued with the realty.

Property that can be relocated without destroying its utility or the structure holding it, such as standalone machine tools, vehicles, and loose equipment.

Land and things permanently attached to it, including buildings and embedded plant, which cannot be moved without damage to themselves or the structure.

The price at which property would change hands between a willing buyer and willing seller, neither under compulsion, both having reasonable knowledge of relevant facts.

The amount realisable in a limited time frame when a seller is compelled to sell, typically lower than fair market value because of restricted marketing and buyer pool.

The price achievable under severe time pressure or adverse circumstances, usually below forced sale value, reflecting an urgent and constrained transaction.

The net amount that would be realised if an asset or business were wound up, with assets sold individually, after deducting disposal costs and liabilities.

The value of an operating business or asset in its installed and functioning state, including the benefit of assembled workforce, contracts, and operational readiness.

The current cost to replace an asset with a modern equivalent, reduced to reflect physical deterioration, functional obsolescence, and economic obsolescence.

The current cost of acquiring or constructing a new asset with equivalent utility and capacity, using present-day prices, technology, and construction methods.

The current cost of creating an exact replica of an asset using the same materials, design, and technology, even if that design is no longer current.

A loss in value from causes other than physical wear, arising from outdated design, excess capacity, or external market and regulatory factors.

Loss of value because an asset's design, technology, or capacity is less efficient than modern alternatives, including curable and incurable deficiencies.

Loss of value caused by external factors such as reduced demand, surplus industry capacity, or regulatory change, outside the control of the asset owner.

The measurable loss in value from wear and tear, corrosion, fatigue, and aging of an asset during use or while standing idle.

A method allocating the depreciable amount of an asset evenly over its estimated useful life, producing a constant annual charge.

A depreciation method applying a fixed percentage to the reducing book balance each year, giving higher early charges and a declining charge over time.

The period over which an asset is expected to be economically usable by one or more owners, considering wear, technology, and market conditions.

The estimated future period an existing asset can continue in productive service before retirement, replacement, or loss of economic viability.

The amount at which an asset is carried in the accounting records, being original cost less accumulated depreciation and impairment charges.

A valuation method estimating value from prices paid for comparable assets in actual transactions, with adjustments for differences in condition, capacity, and timing.

A market-based technique using recent sale prices of similar machinery, adjusted for age, specification, location, and terms of sale, to indicate value.

A valuation method converting the expected future economic benefits of an asset into present value using a discount rate reflecting risk.

A valuation method estimating value as the current cost of replacing or reproducing an asset less accrued depreciation from all causes.

A technique projecting future cash flows attributable to an asset or business and discounting them to present value at a risk-adjusted rate.

A method converting a single representative earnings figure into value by dividing it by a capitalisation rate reflecting required return and growth.

The rate of return used to convert future cash flows into present value, reflecting time value of money and the risk of the asset.

The total outlay to place an asset in working condition, including purchase price, freight, foundation, erection, commissioning, and associated taxes.

A depreciation method allocating a larger portion of an asset's cost in earlier years, such as sum-of-years-digits or double declining balance.

The estimated amount realisable from disposal of an asset at the end of its useful life, net of dismantling and removal costs.

The amount obtainable by selling an asset for its material content when it can no longer be used productively.

The process of restating the carrying amount of plant and machinery to current value, often through periodic professional appraisals for accounts or secured lending.

The arrangement of machinery and work areas within a facility, which affects valuation because relocation or reconfiguration costs influence utility and marketability.

The specific date as at which the value of an asset is assessed, fixing the market conditions, prices, and exchange rates used by the valuer.

The formal written output of a valuation engagement, stating the asset, purpose, valuation date, basis, methods, assumptions, and the concluded value.

A valuation premise assuming both parties are motivated but not compelled, acting prudently and with reasonable knowledge of the asset and market.