Depreciation and CPR

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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
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Depreciation and CPR
The wear and tear on buildings, systems and
equipment
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Actual Depreciation

• New building
• Useful life 50 years
• 2 of the building gets used up each year
• If nothing is done, in 50 years, you will have a
  pile of rubble (unusable building)
• The building has depreciated to nothing

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What Depreciates?

• Buildings
• 40-50 year useful lives
• Systems
• Boilers, HVAC, hockey arena ice makers
• 30 year useful lives
• Equipment
• Furnishings, copiers, etc
• 5 year useful lives

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Examples

• New building cost 10,000,000
• Useful life 50 years
• 200,000 per year in depreciated value
• Ice making equipment cost 850,000
• Useful life 30 years
• 28,050 per year in depreciated value

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Financial Depreciation

• An auditors calculation of actual depreciation
  using standard formats and guidelines.
• Strength annual calculation of lost value
• Weakness calculate using original value

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Financial Depreciation

• A building that cost 1,000,000 fifty years ago
  will cost more to replace today.
• Better than financial depreciation is to
  calculate actual depreciation using replacement
  costs.

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SPAs Depreciation

• Financial in 1999-2000
• 909,934 (accelerated)
• Add 11,000,000 of new buildings
• Add 200,000
• Add 1,000,000 of new FFE
• Add 200,000
• TOTAL Estimate at 1,310,000

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Counteracting

• Capital Plant Replacement (CPR)
• Funds set aside for current or future use to
  offset depreciation.
• The ONLY way to maintain the value of the
  property is to allocate CPR in the amount of
  depreciation.

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Deferred Maintenance

• The difference between actual depreciation and
  replacements to plant.
• 909,000 in depreciation
• 350,000 in CPR
• Subtract the CPR from the depreciation to get the
  amount of deferred maintenance accrued in one
  year
• 559,000 in one year alone

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Stages
Fund replacement depreciation
Fund book depreciation
Fund partial depreciation
Fund no depreciation
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Costs

• Cost per pupil
• Wear and tear on buildings
• Total amount of depreciation divided by number of
  students
• Tuition should include a cost for depreciation
  (CPR)

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Additions

• For every additional square foot, students will
  have an added cost of 4.66 which will need to be
  funded.
• We currently have 306 square feet under cover for
  each student.

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Failure to Act

• Results ultimately in a pile of rubble.
• Results immediately in a sliding scale of shabby
  gentility.
• What image will you choose for the SPA of the
  future?