ARM 42.22.1312. INDUSTRIAL MACHINERY AND EQUIPMENT DEPRECIATION SCHEDULE

(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. (2) The department will utilize the depreciation schedules set forth above as reflected in the following example: 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 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 2013 Table - Table 18 Case I II Equipment - Motor Original Installed Cost $ 200 $ 100 Year Installed 2005 1987 Case I Case II Cost $ 200 Cost $ 100 x Trend 1.215 x Trend 1.352* RCN $ 243 RCN $ 135 x % Good .30 x % Good .20 Sound Value $ 73 Sound Value $ 27 *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.