Equipment in a Family Property File

A truck, excavator or combine can carry several figures: purchase price, accounting book value, a dealer’s asking price and an estimate of what it could sell for. In a separation, choosing among those figures requires an explanation of the asset, the date and the valuation assumptions. Neither spouse should have to accept a number simply because it appears on a financial statement or an online listing.

Equipment also needs to be placed correctly in the family property accounting. The machine’s value, its associated debt and the value of the business using it are connected, and careless treatment can count the same value twice.

Identify the equipment and its owner

Start with a schedule that identifies each significant item by make, model, year and serial number. Record its location, relevant attachments, hours or mileage, and the person or entity that owns it. Purchase invoices and financing documents help reconcile that schedule with the accounting records.

Possession does not establish ownership. A contractor may use a rented excavator, a farm may operate a parent’s tractor, or a corporation may own a truck driven daily by one spouse. Those arrangements need to be identified before assigning an asset value to the person whose property is being accounted for.

For a fleet or workshop, reconcile additions, disposals and trade-ins to the asset register. An old machine may remain on a schedule after disposal, while attachments or smaller equipment may have been recorded elsewhere. The aim is a complete, identifiable inventory without duplicated entries.

Set the valuation date and basis

Section 15(2) of Manitoba’s Family Property Act generally measures an asset by what it could reasonably realize in an open-market sale between a willing seller and buyer. Section 15(3) addresses assets that are inherently non-marketable. Counsel should confirm the applicable instructions, including the date under section 16. [1]

An appraisal prepared for a lender or insurer may answer a different question. Equipment continuing to operate in place, equipment removed for resale and equipment sold under liquidation assumptions can have different values. CBV Institute’s equipment valuation materials explain these distinctions; the assumptions need to fit the assignment. [2]

A separation does not itself establish that every machine must be sold immediately. A proposed quick-sale figure should explain the circumstances it assumes and why those circumstances are relevant.

Distinguish accounting and tax balances from market evidence

Book value reflects accounting cost and depreciation, rather than a fresh assessment of the used-equipment market. Undepreciated capital cost is a separate tax measure used in calculating capital cost allowance. CRA generally groups depreciable property into classes, so a tax balance may relate to several assets rather than one identifiable machine. [3]

A fully depreciated asset may still be useful and saleable. Conversely, a machine with a substantial book balance may have suffered damage or become unsuitable for current production. The report should explain any assumption that an accounting amount approximates market value.

Replacement cost also requires care. The cost of acquiring equivalent new equipment answers a different question from the price obtainable for the existing used machine. An insurance schedule can help identify assets, but its figures need interpretation before use in a family property valuation.

Test the comparables against the actual machine

Useful market evidence must relate to equipment with sufficiently similar characteristics. Age alone tells little about two trucks with very different mileage, maintenance histories and specifications. A comparable sale should be assessed for its date, location, condition and included attachments.

An asking price records what a seller hopes to receive. A completed sale provides transaction evidence, although its terms still matter. Dealer preparation, warranties or auction conditions may affect comparability, and the analysis should explain material adjustments rather than averaging unlike prices.

The figures also need a consistent treatment of transaction costs. Establish whether a reported price includes a buyer’s premium or sales taxes, and whether the estimated proceeds deduct commissions or removal costs. A gross sale price and a seller’s net receipt cannot be compared without reconciliation.

Historical condition can be particularly difficult to establish. Photographs, service records and inspection reports may help distinguish defects present at separation from wear or damage occurring later. A later sale can be informative, provided intervening use and market changes are considered.

Decide when specialist work is needed

A business valuator may need an equipment appraiser where machinery is material or requires specialist knowledge. Under the 2026 CBV Practice Standard 120, the valuator must consider the need for a specialist and obtain reasonable support for relying on that specialist. The standard specifically identifies equipment appraisers as an example. [4]

The engagement should state whether there will be a physical inspection, what records are available and which assumptions remain unverified. A desktop appraisal may be appropriate in some circumstances, but its limitations must be understood. Missing serial numbers, uncertain condition or denied access can materially restrict the conclusion.

Reconcile equipment with debt and business value

An equipment appraisal ordinarily needs to distinguish the machine’s value from amounts owing on it. A valuable truck may have little equity after financing, while a smaller, debt-free vehicle may contribute more net value. The debt balance must relate to the same date and be deducted only once.

Leased equipment requires examination of the agreement, including purchase options and remaining obligations. It should not simply be listed as owned machinery with a loan attached. Any treatment within the business valuation must be consistent with the treatment of lease payments and liabilities.

Where a corporation owns the equipment, its value may already be reflected in the share valuation. Adding the equipment again to the shareholder’s personal property schedule can duplicate value. Likewise, an earnings valuation should explain how it accounts for the machinery required to generate those earnings.

Explain taxes and any remaining disagreement

Disposing of depreciable equipment can produce recapture of capital cost allowance or other tax consequences. CRA’s guidance explains that recapture depends on the relevant tax-class calculation; it cannot reliably be estimated from a market value alone. Any estimated taxes and selling costs should be identified with their assumptions for counsel’s consideration. [5]

When figures differ, identify whether the disagreement concerns ownership, condition, comparable sales or valuation assumptions. That gives both spouses a practical basis for seeking clarification or further evidence. Acadia Hill can discuss how an equipment appraisal should fit within the broader business valuation and the financial questions counsel needs answered.

Peter Fast, CBV, Acadia Hill

This article provides general information and is not legal, tax or accounting advice. The appropriate scope depends on the purpose, intended users, available evidence and specific circumstances of the engagement. Family law counsel should advise on how the law applies to your situation.