Fair Value Appraisal Report for Impairment Test

By conducting a Fair Value Appraisal Report for Impairment Test with Setape, you are ensuring that the valuation of your assets will be done correctly and accurately.

What is the Fair Value for Impairment Test?

Companies must ensure that the carrying amount of their assets is less than or equal to the amount that can be recovered by selling or using them. According to CPC 01 (Brazilian Accounting Committee), when this does not occur, the company must recognize an adjustment for impairment losses.

Thus, companies must periodically perform the impairment test, which for the case of fixed asset is analyzed by comparing the result of the appraisal of the Fair Value of their assets (less sales expenses) vs their book value.

According to CPC 01 – Impairment Test, companies must periodically review (at least once a year), the book values ​​of their assets, comparing them to their appraised values ​​and checking if there is an impairment to be considered.

What are the benefits of conducting a Fair Value Appraisal Report for Impairment Test?

The main benefit is the determination of the fair value of its fixed assets and thus meet the requirements of CPC 01.

In addition, almost all of the standards established by CPC pronouncements require the determination of the fair value of assets and liabilities.

What are the services related to the fair value appraisal for impairment that are performed by SETAPE?

SETAPE, through its experience of 46 years of activity, has already carried out Appraisal Reports for several purposes such as:

  • Financial guarantee
  • Asset Reorganization
  • Determination of the market value in use
  • Insurance.

These reports were made for numerous types of assets such as:

  • houses
  • land
  • buildings
  • machines and equipment

– boats

What is appraisal methodology the fair value?

The general methodology used in the appraisal to determine the fair value consists of:

  • Planning of services and identification of assets to be appraised.
  • Physical inventory to verify the existence of each asset,
  • Verification of the conservation status of each asset,
  • Market value research with manufacturers, suppliers etc.,
  • Reconciliation of inventory vs fixed assets,
  • Establishment of the New Replacement Value of the asset,
  • Establishment of fair value, considering its depreciation, obsolescence, conservation status and useful life of the asset,
  • Determination of Net Sales Value, which is calculated through the Net Fair less the selling expenses,
  • Comparison between the fair value net of sales expenses vs accounting books.

The main standards for reports for this purpose are determined by ABNT, being NBR 14653-5 – “Asset valuation – Part 5: Machines, equipment, installations and industrial goods in general”,

NBR 14653-2 – Real Estate;

Norms of IBAPE – Brazilian Institute of Engineering Assessments and Expertise.

The appraisal methodology, according to this standard, depending on the type of property and the existing market information can be:

a) Direct comparative method of market data, which consists of comparing the good with similar ones for sale in the market

b) Cost method, which measures how much would be necessary to replace a given asset, using synthetic or analytical quotes considering its depreciation.

c) Income method, which consists of valuing the asset based on its possibility of future income, in which case we would be reflecting the economic valuation.

Technical Standards

Setape’s valuations are always carried out with strict observance of all guidelines set by the ABNT Standards – Brazilian Association of Technical Standards and Ibape Nacional – Brazilian Institute of Engineering Valuations and Expertise.

Why hire Setape?

Complete Advisory

The only company that performs all services of valuation of movable and immovable property, urban and rural, valuation of companies, and has support for asset control (fixed assets).

Proven Experience

With 45 years of activities and more than 80,000 services performed, it is the company with the most experience in evaluating the fixed assets market and in economic evaluations.

Qualified Team

It has its own team with more than a hundred professionals from all specialties.

Satisfied Customers

Quality of services proven by its customers

International Coverage

It belongs to the VRG – Valuation Research Group of international valuation companies with service coverage on all continents

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