Can I use net book value to estimate forced or orderly liquidation values of machinery and equipment?

No. Never!

Net Book Value should never be used to estimate Forced Liquidation Value (FLV) and Orderly Liquidation Value (OLV). Net book value is calculated by using the original cost of the asset as the starting point and systematically reducing this amount by a depreciation factor derived under accounting rules. Conversely, FLV and OLV are both derived by analyzing demand for the asset in the current marketplace using applicable appraisal methodologies and relevant and timely transaction information from comparable sales, when available. Furthermore, both FLV and OLV appraisals generally assume that the asset is being sold piecemeal, under duress, without warrantee, to be removed from its current location at the buyer’s expense.

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