X

Download Depreciation Mihaylo College of Business and Economics PowerPoint Presentation

SlidesFinder-Advertising-Design.jpg

Login   OR  Register
X


Iframe embed code :



Presentation url :

Home / Health & Wellness / Health & Wellness Presentations / Depreciation Mihaylo College of Business and Economics PowerPoint Presentation

Depreciation Mihaylo College of Business and Economics PowerPoint Presentation

Ppt Presentation Embed Code   Zoom Ppt Presentation

PowerPoint is the world's most popular presentation software which can let you create professional Depreciation Mihaylo College of Business and Economics powerpoint presentation easily and in no time. This helps you give your presentation on Depreciation Mihaylo College of Business and Economics in a conference, a school lecture, a business proposal, in a webinar and business and professional representations.

The uploader spent his/her valuable time to create this Depreciation Mihaylo College of Business and Economics powerpoint presentation slides, to share his/her useful content with the world. This ppt presentation uploaded by worldwideweb in Health & Wellness ppt presentation category is available for free download,and can be used according to your industries like finance, marketing, education, health and many more.

About This Presentation

Slide 1 - Depreciation Loss in value from any cause Dis-utility Difference between contribution to market value and cost as though new of the improvements Wayne Foss, MBA, MAI, CRE Foss Consulting Group Email: wfoss@fossconsult.com
Slide 2 - 2 Depreciation Cost As If New as of the date of appraisal Less Depreciation (from all causes) Equals Contribution of Improvements to the Site
Slide 3 - 3 Three Types 1. Physical Deterioration - Curable and Incurable 2. Functional Obsolescence - Curable and Incurable 3. External Obsolescence - always incurable Curable means you can do something about it - and it makes economic sense to do it It’s curable when the cost-to-cure is exceeded by value added. Whether something is curable is an economic test, not physical.
Slide 4 - 4 Underlying Concepts Effective age and Economic life rather than Actual Age and Physical Life are important standards Depreciation is a market phenomenon not a physical or accounting concept. The market decides these amounts; we interpret what it is saying.
Slide 5 - 5 Underlying Concepts Physical Age = Chronological Age Effective Age is the age indicated by the condition and utility of the structure. If well-maintained, with good long-lasting appealing design, effective age often is less than actual age. depends on market standards, quality of care and maintenance.
Slide 6 - 6 Underlying Concepts Economic Life is the period of time over which improvements contribute to property value. This is usually shorter than useful life. Economic life is influenced by Physical, Functional and External considerations.
Slide 7 - 7 Underlying Concepts Accrued Depreciation is an economic phenomenon applied to the total sum invested in improvements. It is not the same as accountants book depreciation - the prescribed systematic write-off of the cost of an asset over time. Depreciation in appraising is market related with no relationship to the assets original cost or book depreciation.
Slide 8 - 8 Underlying Concepts Depreciation ultimately comes from the market is the difference between cost as if new and worth or value. Depreciation applies only to the improvements. Depreciation is relative to market standards. It is not a mechanical process imposed on the property.
Slide 9 - 9 Depreciation: Basic methods of estimating depreciation Market Extraction Age-Life Method Modified Age-Life Method Breakdown or Engineering Method
Slide 10 - 10 Depreciation Market Extraction, overall depreciation 1. For a comparable sale observation: First, find the contribution of the main improvements for example: Sale Price: $250,000 Less Site Value: - 100,000 Less Minor site Improvements: - 5,000 Equals: Contribution of Main Improvements: $145,000
Slide 11 - 11 Depreciation Market Extraction, overall depreciation 2. Compare the contribution of improvements to cost as if new $ Cost as if new, improvements: $200,000 Less Contribution of improvements: - 145,000 Equals: Depreciation Overall: $ 55,000
Slide 12 - 12 Depreciation Market Extraction, overall depreciation $ Depreciation  Cost As Though New = Depreciation % $ 55,000  $200,000 = 27.5% Divide by effective age: 27.5%  15 yrs To get Depreciation per year: 1.83% Also, you can divide into 1.0 (reciprocal) to get market indication of total economic life expected by the market. 1.0  1.83% = 55 years
Slide 13 - 13 Depreciation Market Extraction, overall depreciation Do this for a number of similar properties: Sale Eff. Age Deprec.%/yr. Life Exp.. 1 10 2.0% 50 yrs 2 12 1.5% 67 yrs 3 8 1.7% 59 yrs 4 15 2.2% 45 yrs Conclusion: depreciation for this type of property is about 2% per year; and the market’s expected economic life is about 55 years.
Slide 14 - 14 Depreciation Age-Life method; overall depreciation Concept: Effective Age divided by Total Economic Life equals Depreciation Percentage. Example: consider this building: Actual Age: 18 years; Effective Age: 12 years Remaining Economic Life is 48 years, so ….. Effective Age = 12 Remaining Economic Life = 48 Total Economic Life = 60 years Overall Depreciation = 12 / 60 = 20% Improvements have 12 years used up out of 60 , or 20%
Slide 15 - 15 Depreciation Modified Age-Life method; overall depreciation In the modified method, the physical curable items, or repairs needed, are deducted first. Then the effective age and remaining economic life are considered, as though after the repairs completed, as before. For example …….
Slide 16 - 16 Building: 100,000 @ $60 = $ 6,000,000 Other Improvements: 100,000 Total Cost as though new: $6,100,000 Less Physical Curable - Repairs: - 50,000 Subtotal: $6,050,000 Effective age after repairs: 10 years; Total Economic Life of 50 years; Physical Incurable then: 10/50 = 20% or $1,210,000 Depreciated Cost of Improvements: $4,840,000 Add Site Value: 1,500,000 Indicated Value by Cost Approach: $6,340,000
Slide 17 - 17 Depreciation Breakdown method Each type of depreciation is handled in sequence Physical Deterioration, Curable & Incurable Functional Obsolescence, Curable & Incurable External Obsolescence (always incurable; allocate total to Improvements)
Slide 18 - 18 Depreciation 1. Physical Deterioration Wear and tear, action of the elements, loss in value from aging, wearing out, being used-up. Curable - to cost of replacing or fixing the item less than the value added to the property. Incurable - makes no economic sense to fix or replace the item. Can be short or long lived items, difference is life of the component.
Slide 19 - 19 Depreciation Breakdown method; overall depreciation In the breakdown method, the physical curable items, or repairs needed, are deducted first. Then the short-lived components are analyzed and depreciation deducted. Then the residual remaining to be analyzed is the long lived components. The effective age and remaining economic life are considered, as though after the repairs completed, as before. For example …….
Slide 20 - 20 Building: 100,000 @ $60 = $ 6,000,000 Other Improvements: 100,000 Total Cost as though new: $6,100,000 Less Physical Curable - Repairs: - 50,000 Subtotal: $6,050,000 Less Short Lived Components: Component Cost Age Life % Deprec Total Roof: $30,000 8 20 40% $ 12,000 Less Long-Lived Components: Total Cost as though new: $6,100,000 Less Curable Items: - 50,000 Less Short-Lived Components: - 30,000 Residual: Long Lived Components: $6,020,000 Effective age after repairs: 10 years; Total Economic Life of 50 years; Physical Incurable then: 10/50 = 20% or $1,204,000 Depreciated Cost of Improvements: $4,834,000 Add Site Value: 1,500,000 Indicated Value by Cost Approach: $6,334,000
Slide 21 - 21 Depreciation 2. Functional Obsolescence From inadequacy or super-adequacy (too much or too little) of building materials, design, floor plan layout, etc. May be curable or incurable The test of curability is to see if it is economically sensible to fix the problem. It is curable if the value added exceeds the cost-to-cure.
Slide 22 - 22 Procedure for Estimating all forms of Functional Obsolescence Step 1: Cost of existing item: $xxx,xxx Step 2: Less depreciation previously charged -$xxx,xxx Step 3: Plus Cost to cure (all costs) or $xxx,xxx Value of the loss Step 4: Less cost if installed new -$xxx,xxx Step 5: Equals depreciation for functional obsolescence $xxx,xxx
Slide 23 - 23 Example: Functional Obsolescence - Curable Example of deficiency requiring an addition: Office building without air conditioning in a market where that feature is standard. Current Cost to install: $15,000 Cost to install if part of the original construction: $12,000 Contributory value of the air conditioning: $25,000
Slide 24 - 24 Example: Functional Obsolescence - Curable Step 1: Cost of existing item: $ 00 Step 2: Less depreciation previously charged -$ 00 Step 3: Plus Cost to cure (all costs) or $15,000 Value of the loss Step 4: Less cost if installed new -$12,000 Step 5: Equals depreciation for functional obsolescence $ 3,000
Slide 25 - 25 Example: Functional Obsolescence - Incurable Office building with exterior and interior walls partially constructed with concrete block and wood frame and stucco. Market does not recognize superior construction of concrete block with increased rents, hence the excess cost is superadequate. Total Square Feet in Building: 5,000 Cost of Concrete Block over Wood frame&stucco: $ 5.00 sf Total Excess Cost: $25,000
Slide 26 - 26 Example: Functional Obsolescence - Incurable Step 1: Cost of existing item: $25,000 Step 2: Less depreciation previously charged -$ 5,000 Considered in Physical Deterioration, long-lived components: 20% Step 3: Plus Cost to cure (all costs) or $ 00 Value of the loss Step 4: Less cost if installed new -$ 00 Step 5: Equals depreciation for functional obsolescence $20,000
Slide 27 - 27 Depreciation 3. External Obsolescence Loss in value of improvements (only) due to factors outside property boundaries. Almost always incurable because of being beyond the owners control. Causes: Physical Externality - example: near adverse influence Economic - example: currently in economic downturn, building costs above values.
Slide 28 - 28 External Obsolescence Estimate loss to property overall; then allocate to the building part (land part was considered in site value estimate). For example: a capitalization rent loss method: Income loss due to bad influence: $10,000 per year for a property with 20% of its value in the site. Capitalization Rate from the Income Approach is 10%. $10,000 / 10% = $100,000 total Allocation to the Building: $100,000 x 80% = $80,000 External Obsolescence
Slide 29 - 29 So that’s an overview of Depreciation Remember: Its market driven, comes from the market Its not like accounting depreciation Its applied to cost as though new as of the date of appraisal - not original cost Wayne Foss, MBA, MAI, CRE, Fullerton, CA USA Phone: (714) 871-3585 Fax: (714) 871-8123 Email: wfoss@fossconsult.com
 

Frequently Asked Questions

> About SlidesFinder?

Slidesfinder is a website that allows users to upload and share their PowerPoint presentations online. It provides a platform for individuals and businesses to share their ideas and knowledge through presentations, and for others to view and download these presentations for educational or professional purposes.
Slidesfinder offers a wide range of presentation topics and categories, including business, education, science, technology, health, and more. Users can also search for presentations using keywords, tags, or by category. The website provides tools to create professional presentations with rich media, animations, and graphics.



One of the key features of Slidesfinder is its user-friendly interface, which allows users to easily upload, view, and share presentations. Users can also embed their presentations in their websites or blogs using the website's embed code feature.
Slidesfinder also offers premium services, such as the ability to create private presentations and to download presentations in high-quality formats. However, the basic features of Slidesfinder are free to use, making it accessible to anyone who wants to share their ideas and knowledge through presentations.

> How do I register with SlidesFinder?

Go to registration page (you can see signup link on top of website page) https://www.slidesfinder.com/signup . If you have facebook/gmail account them just click on SIGN IN WITH FACEBOOK OR SIGN IN WITH GOOGLE button, by this you will be a registered member of slidesfinder without filling any form, required detail automatically will be fatch from your account. If you do not a Facebook account, then click on "Signup". Fill all required fields and you will be a registered member of slidesfinder.

> Is slidesfinder account confirmation is mandatory?

Yes it is mandetory to active your account to login.

> Do I need to signup/login on SlidesFinder before uploading a PowerPoint presentation?

Yes, you need to login with your account before uploading presentation. Your username will be displayed on your uploaded presentation. Your registered email id is needed for sending your stats of uploaded presentation.

Slidesfinder is a sharing website for PowerPoint presentations search and share. Find your interest in the form of powerpoint presentations on slidesfinder and save your valuable time . On Slidesfinder you get presentations from our huge library of professional ppt presentations. We believe in making your search INFORMATIVE and FUN. Find your best ppt presentation from a pool of PowerPoint presentations stacked under important industry categories like business & management, heath & Wellness,eduction & training etc. We provide unique informative PowerPoint presentation for marketers, presenters and educationists. These professional PowerPoint presentations are uploaded by professionals from across numerous industry segments.These ppt presentations are available for FREE download.

Not just finding your interest, but facilitate you broadcast your interest. We have created this platform for easy sharing of PowerPoint presentations, ensuring that these presentations get maximum exposure. Create your slidesfinder account and upload PowerPoint presentations for free, share on social media platforms and BUILD YOUR CROWD WITH PRESENTATION !!

The Great Buddha says, "Share your knowledge.It’s a way to achieve immortality"! So, start sharing knowledge and we are here to make that immortal !!

© 2013-2024 SlidesFinder. All rights reserved.

Re-productivity of content are not allowed. Without prior written permission from author, commercial use of any content is illegal.