Untitled Document
County Bulletin
TO: ALL COUNTY AUDITORS - Bulletin No. 198
November 16. 1964
FROM: Louis J. Schneider. Jr. Tax Commissioner
RE: Computing True Value of Furniture, Fixtures and Equipment
of Hotels and Motels
Bulletin No. 124. issued April 8. 1958, Is hereby amended to
substitute a valuation method for furniture, fixtures and
equipment of hotels and motels. The exhaustion method
continues in effect for the valuation of furniture, fixtures
and equipment of retail and other establishment where book
records are maintained on this method or where book records
do not include all such items still on hand and in use or
held for use.
Assuming that hotels and motels begin business with a fixed
floor area completely furnished, later acquisitions are
primarily replacements. If complete and accurate figures are
not available, replacement allowance can be computed and
substituted for disposal values in the 302 True Value
Computation, by the application of standard equipment cost
indexes. A replacement allowance percentage, obtained by
dividing the former year cost index by the current year cost
index, is applied to the cost of the current acquisition to
determine the replacement allowance for the property
replaced. For example. If a $5, 000 furniture purchase
replaces twelve-year-old furniture, and the cost index of
twelve years ago is 79% of the cost Index of the current
year, the replacement allowance to 79% of $5,000 or $3, 950.
Each year's acquisitions are considered as replacements of
oldest items not yet offset by prior replacement allowances.
By converting the cost of the new items into equivalent costs
of the past years, through the cost-index percentage.
disposals of old items are credited at the computed
replacement allowances. This method to the reverse of the
common appraisal practice of computing present replacement
costs of property.
The following sample computations and cost Indexes for hotel
and motel equipment for the years 1925 through 1963 and the
first half of 1964 illustrate the method to be used.
COST INDEXES FOR HOTELS AND MOTELS
|
Year
|
Cost Index
|
Year
|
Cost Index
|
Year
|
Cost Index
|
Year
|
Cost Index
|
|
1964*
|
220.3
|
1954
|
174.9
|
1944
|
102.7
|
1934
|
72.9
|
|
1963
|
219.5
|
1953
|
174.2
|
1943
|
100.8
|
1933
|
71.5
|
|
1962
|
217.1
|
1952
|
172.8
|
1942
|
100.1
|
1932
|
68.5
|
|
1961
|
215.4
|
1951
|
173.5
|
1941
|
93.6
|
1931
|
72.8
|
|
1960
|
214.3
|
1950
|
160.9
|
1940
|
88.8
|
1930
|
83.3
|
|
1959
|
212.7
|
1949
|
153.6
|
1939
|
85.2
|
1929
|
89.1
|
|
1958
|
210.9
|
1948
|
160.5
|
1938
|
82.8
|
1928
|
94.8
|
|
1957
|
206.7
|
1947
|
148.6
|
1937
|
85.2
|
1927
|
95.3
|
|
1956
|
195.8
|
1946
|
120.6
|
1936
|
81.2
|
1926
|
100.0
|
|
1955
|
181.5
|
1945
|
103.8
|
1935
|
77.7
|
1925
|
107.8
|
*Six Month Index - 1964
APPLICATION
What was the cost of furniture acquired in 1951 which was
replaced in 1963 at a cost of $5, 000 ?
1951 cost
index
173. 5 = 79%
1963 cost
index
219.5
79% of $5, 000 (1963 cost) = $3,950 as 1951 cost
TRUE VALUE COMPUTATION
December 31,
1963
Year of
Acquisition
|
Acquisition Cost
|
Replacement Allowance
|
Remaining Cost
|
True Value
Pct. Amount
|
|
1951
|
250,000
|
3,950
|
246,050
|
20
|
49,210
|
|
1963
|
5,000
|
|
5,000
|
95
|
4,750
|
|
|
|
|
|
|
255,000
|
3,950
|
251,050
|
|
53,960
|
DEPARTMENT OF TAXATION
INTER-OFFICE
COMMUNICATION
TO : ALL DISTRICT MANAGERS
DATE: February 6, 1978
FROM: Thomas R. Nourse, Admin. Asst., Property Tax Division
RE: County Auditor Bulletin No.
198
ATTN: Property Tax Supervisors
The following is a summary and update of all the cost indexes
established since the issuance of the bulletin, November
16,1964.
Year
Cost Index
|
1964
|
220.4
|
|
1965
|
222.3
|
|
1966
|
227.6
|
|
1967
|
238.4
|
|
1968
|
248.4
|
|
1969
|
260.2
|
|
1970
|
275.1
|
|
1971
|
287.6
|
|
1972
|
295.0
|
|
1973
|
307.6
|
|
1974
|
346.6
|
|
1975
|
381.2
|
|
1976
|
403.4
|
|
1977
|
423.7
|
TRN/pj
cc: Jim Witzel
Wil Margeson
Chuck Green
Ed Heinke Jr.
Bob Dudgeon
Jack Cook
Chris Whitaker