An evaluation of valuers’ approach to depreciation in plant and machinery valuation in Lagos State, Nigeria

Abstract

This study investigated the current approach to depreciation in plant and machinery (P&M) valuation in Lagos state. Primary data were sourced through structured questionnaires administered on 50 selected estate valuation firms in Lagos metropolis to investigate their understanding and application of depreciation techniques to plant and machinery valuation based on their current practices. Fourty-three of these questionnaires were retrieved and were analyzed using descriptive statistics. This research found that many practitioners do not have sufficient understanding and applications of different depreciation techniques. This is one of the major causes of the apparent inconsistencies, undervaluation and overvaluation. While acknowledging remedial steps that are already in place, the study recommended other measures that will improve practitioners’ approach to depreciation and will in turn enhance the local plant and machinery valuation practice. These include regulatory bodies promoting local capacity building through formal and informal education, continuous professional development etc., introducing valuation practical notes/guidelines, more researches targeted at P&M valuation and finally, Valuers are encouraged to be willing to embrace necessary changes in practice.

Keywords: Depreciation Techniques, Lagos State, Plant and Machinery Valuation