(1) The department will utilize the machinery and equipment depreciation schedule which is set forth in the following table. The depreciation schedule will be used to value industrial machinery and equipment for ad valorem tax purposes pursuant to ARM 42.22.1306.
MANUFACTURING MACHINERY AND EQUIPMENT PERCENT GOOD TABLE
Life Expectancy
(Age) |
5 |
10 |
12 |
13 |
15 |
16 |
18 |
20 |
|
|
|
|
|
|
|
|
|
1 |
85 |
92 |
94 |
94 |
95 |
95 |
96 |
97 |
2 |
69 |
84 |
87 |
88 |
90 |
91 |
93 |
93 |
3 |
52 |
76 |
80 |
82 |
85 |
86 |
89 |
90 |
4 |
34 |
67 |
73 |
75 |
79 |
80 |
83 |
86 |
5 |
20 |
58 |
66 |
69 |
73 |
74 |
78 |
82 |
6 |
|
49 |
58 |
62 |
68 |
69 |
74 |
78 |
7 |
|
39 |
50 |
54 |
62 |
64 |
68 |
74 |
8 |
|
30 |
43 |
47 |
55 |
57 |
63 |
70 |
9 |
|
24 |
36 |
41 |
49 |
52 |
59 |
65 |
10 |
|
20 |
29 |
34 |
43 |
46 |
53 |
60 |
11 |
|
|
24 |
29 |
37 |
40 |
47 |
55 |
12 |
|
|
20 |
24 |
31 |
34 |
42 |
50 |
13 |
|
|
|
20 |
26 |
29 |
36 |
45 |
14 |
|
|
|
|
23 |
26 |
32 |
40 |
15 |
|
|
|
|
20 |
23 |
28 |
35 |
16 |
|
|
|
|
|
20 |
25 |
31 |
17 |
|
|
|
|
|
|
22 |
27 |
18 |
|
|
|
|
|
|
20 |
24 |
19 |
|
|
|
|
|
|
|
22 |
20 |
|
|
|
|
|
|
|
20 |
(2) The department will utilize the depreciation schedules set forth above as reflected in the following example:
EXAMPLE
The Trending/Depreciation Procedure
In order to use the economic age-life method to value machinery and equipment, several steps must be followed.
1. Determine the economic life of the subject industry.
2. Acquire a set of reasonable trends for that economic life.
3. Acquire the original installed cost (direct and indirect) for the subject equipment.
4. Apply the appropriate trend factor to the original installed cost to determine replacement cost new (RCN) .
5. Depreciate the RCN on the basis of age to arrive at sound value. Example:
Industry - Sawmill
Economic life - 10 years
2004 Table - Table 18
Case I II
Equipment - Motor
Original Installed Cost $ 200 $ 100
Year Installed 2000 1977
CaseI Case II
Cost $ 200 Cost $ 100
x Trend 1.027 x Trend 1.125*
RCN 205 RCN 113
x % Good .67 x % Good .20
Sound Value $ 138 Sound Value $ 23
*The trending factor is applied only to the last year of the economic life. Although the equipment is more than 20 years old, it is trended by the 10th year trend.