An important part of performing the asset value calculation is accounting for asset treatments and their effects. Treatments are important in two basic ways:
- It is important to consider what treatments are typically performed on an asset to determine an asset’s useful life and “residual value,” or value when an asset reaches the end of its useful life.
- In some cases, one may wish to specifically include additional treatments in the asset value calculation besides asset acquisition/construction and reconstruction. This is particularly important if one is predicting future asset value.
This section describes the specific steps involved in the four basic activities addressed in this chapter: identifying treatments; determining treatment costs and effects; determining asset useful life; and determining residual value.
The following are hypothetical examples illustrating application of the steps described in Section 5.2.
This section provides examples of “emerging,” “strengthening,” and “advanced” practices for defining treatments and treatment effects. Maturity levels are defined for each of the four areas defined in the guidance. In the table an emerging practice is one that supports the guidance with minimal complexity, an advanced practice illustrates a “state of the art” example in which an agency has addressed some aspect of the asset value calculation in a comprehensive manner, and strengthening practice lies between these two levels.