A Depreciation Report is a long-range financial planning tool that identifies the current status of the capital reserves and provides a funding plan to offset the anticipated future major common area replacement obligations.

 

A Depreciation Report is a report that tells you:

~What you own

~How much money you have

~When components need to be replaced

~What it's going to cost for future replacement

~What you can do to pay for future replacement

 

The purpose of a Depreciation Report is to assist the owners in establishing a plan to maintain asset value by contributing to a well-managed reserve fund.

 

It's purpose is to help you keep your property value up and provide assurance for
future owners

 

~Equalize the multi-year contributions necessary to cover future replacement costs

~Develop a stable and equitable funding plan that meets the needs of current and future Owners

~Be prepared for anticipated future system deterioration and failures through proactive planning instead of reactive response

~Knowledge of the service lives and projected replacement cost of the assets

 

The Depreciation Report provides a detailed breakdown / analysis of all components of the subject and provides detailed analysis of both the physical and financial aspects of the subject property as well as future funding requirements.

 

Physical Analysis (how long do things last?)

~ Component inventory

~ Condition review of the assets

~ Effective Age of the assets

~ Estimated remaining life of the assets

 

Financial Analysis (how much do things cost?)

~ Future replacement cost of the assets

~ Current funding level

~ Inflation rate, interest rate, etc.

~ Annual allocation to the reserve fund