Help Needed in Buying Used Equipment...

[EdSnyder]

Hello Everyone!

I am considering buying a small existing coffee shop that has good P&L's and is showing a modest net profit. My investors is asking what the equipment list is worth if the were to close today, how much could everything be sold for?

The current owner gave the list that they said is worth $56,675.00 That is what they spent when opening 11 years ago and adding to along the way.

I handed the list over to my CPA to do the deprecation value on everything and that figure went $20,370.00. Now I am looking for the Fair Market Value of this equipment. Is their a formula to figure the FMV?

The newest piece is the Espresso Machine they bought last year at $8,000. Everything else was bought slightly used as far back as 2007, some in 2010 and 2012.

Thank you in advace for your help in this matter.

 

[wmark]

Wow.............my accountant depreciates my brand new equipment to zero over 5 years. The point being, 11 years ? That should be worth nothing on the books and not much more fair market. The espresso machine ?........maybe worth $4,000. Was it maintained ? Does it have a water softener attached ? (if not, life is greatly shortened). Even machines that a new and operating can seize within months with lack of use. Take a look at what you can buy that machinery for on ebay, kijiji etc.................it will be not much

 

[EdSnyder]

WMark, Thank you for your reply. My accountant does up to seven years and yes most of everything on this list is at ground zero, worth nothing. The espresso machine was bought a year ago for $8,000 and with deprecation it's worth $6,800. They do have a water filtering system and have kept up with the maintenance. That is their big ticket item on the list. I read on another post someone state that you can figure .20 cents on the dollar and I was wanting to put this out there to see if anyone else had a formula to figure what is fair market value.

I will go check out those sites as you suggest.

Thanks again.