How asset disposition plays an important role in managing different kinds of assets?

This is a very important topic to discuss in accordance with the economic condition of the recent times. Asset disposition is a field which people hardly know, but it is very important to have a good knowledge of it.

There are large, and heavy books for asset disposition studies which will definitely provide a crystal clear idea about the concept, but this blog will give you the interest to read more about the subject.

Assets disposition is defined as the sale or other kinds of disposition by the parent or any of its restricted subsidiaries other than to the parent, the issuers or some other subsidiary.

Asset disposal plan- The master planning method in asset disposition

Over here asset disposal plan is the only method by which a person can have a basic and clear understanding of this disposition process. This mainly documents the activities and different cost that are involved in the disposal of the infrastructure assets. It is primarily used by companies to manage their own infrastructure and different other utilities.

The concept of asset disposal reflects the theory of sound asset management. It involves all kinds of activities which are associated with any decommissioned asset such as its sale demolition and even relocation.

In this regard, it is said that a proper plan will also help a company to forecast the time for future asset disposal, and even the cash flow for the income and expenditure in the upcoming years. This will also ensure that all the assets which have been replaced are ready to operate again and absorb the complete workload.

It is difficult for a company to handle all these things, and therefore they hire services for managing their assets. The institutions catering to asset disposition have the kind of expertise in managing and protecting all kinds of assets and give the most profitable return to their clients.

As said in the beginning that asset disposition studies is a huge chapter, and it needs time to understand and acquire knowledge.

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Asset Disposition at Lindon Engineering Services

Lindon Engineering Services has developed its own procedure for identifying, quantifying and estimating the cost. Our clients can now realize an additional write-off equal to the value of the abandoned assets less the accumulated depreciation of these components. The result is an additional write-off in the year incurred and the retirement of the disposed of assets.

The resulting asset disposition should provide a list of the components removed, their estimated cost, the accumulated depreciation of each as of the date of construction and the net asset cost to be abandoned.

Lindon Engineering Services, Inc.

350 Missouri Ave

Suite 201

Jeffersonville, IN 47130

United States

Telephone: +1 812-282-1250

Fax: 812-282-1350

E-mail: info@lindonengineering.com

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REMODELING PROJECTS (Asset Disposition)

By: Donald Archer

Recently we have performed a number of cost segregation studies on remodeling/renovation projects. Among the questions that have arisen in reconciling the cost of the renovation are those related to the disposition of the cost of assets that have been removed and those remaining from the previous facility. For the most part, we have ignored the cost of the existing building and improvements resulting in their remaining on the client’s books even though some of the assets have been demolished. The recent release of the Temporary Regulations under 263(a) has changed the manner in which the residual basis of existing assets is handled following removal on a remodeling project.

In the past, demolished assets had to be carried on the client’s books until the full cost had been recovered and ultimately retired. Now, however, the value of the removed assets can be written off as abandoned components (Note: This only applies to 39-year real property). Not only does this regulation take effect immediately, but an owner can also write off removed components from remodeling projects performed during the past ten years by filing a Form 3115 (Change in Accounting Method).

By having an engineer or other qualified professional identify, quantify and estimate the cost of the removed 39-year property, the owner can realize an additional write-off equal to the value of the abandoned assets less the accumulated depreciation of those components. The result is an additional write-off in the year incurred and the retirement of the disposed assets.

An obvious obstacle to claiming this allowance is determining the cost of the removed components. Unless the cost of the individual components was known prior to the renovations, calculating their cost can be an arduous task. In the course of calculating individual asset values for cost segregation studies, we have had to calculate the value of demolitions and removals of a variety of components when reconciling the cost of a project. This application is readily adaptable to determining the cost of removed components for abandonment purposes.

In order to perform an estimate of the removed assets, the engineer should have access to the construction drawings including a set of the demolition plans, the most recent depreciation schedules of the facility and the contractor’s final pay application. The resulting asset disposition should provide a list of the components removed, their estimated cost, the accumulated depreciation of each as of the date of construction and the net asset cost to be abandoned.

If you have questions regarding how this might affect your situation, please feel free to contact me at donald.archer@lindonengineering.com or our website at www.lindonengineering.com.

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