Taxing authorities commonly apply a depreciation schedule rather than asset-by-asset methods in determining fair market value for ad valorem assessment purposes on computer property. The reason is dictated by practicality. Although asset-by-asset appraisals result in more accurate estimates of value for any one particular asset, the size of the universe of assets, budgetary limitations, time constraints, and the reliability of current "grouped asset" appraisal methodology are definitive factors.
Corporate taxpayers, faced with similar valuation issues, are examining and, in some cases, contesting their ad valorem taxes using a "grouped asset" appraisal approach.
A "grouped asset" appraisal is the process of valuing a group of items as of a given date by developing a ratio or factor that, when used as a multiplier against historical acquisition cost of the subject property, results in a value reflecting all forms of depreciation. It utilizes a trend line technique that employs historical market evidence based on the appraiser’s valuation analysis, experience, and judgment.
Our huge historical "transactional database" and the frequency which we are called to perform this service by both corporations and municipalities makes us the recognized leaders in developing computer depreciation schedules using this methodology.
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