Depreciation system

The current depreciation system is the Modified Accelerated Cost Recovery System (MACRS), and chemical industries are in the seven-year life category. The rates for years one through eight are 14.29, 24.49, 17.49, 12.29, 8.93, 8.92, 8.93, and 4.46, respectively. The depreciation is spread over an eight-year period for a seven-year asset. It is assumed that, during the first year of the life of the asset, full benefit will not be received from the asset. Therefore, a half-year convention is adopted, and the remaining recovery is made in the eighth year. 

The annualized capital cost (ACC) is the product of the CRF and TCC and represents the total instaUed equipment cost distributed over the lifetime of the project. The ACC reflects the cost associated with the initial capital outlay over the depreciable life of the system. Although investment and operating costs can be accounted for in other ways such as present-worth analysis, the capital recovery method is preferred because of its simplicity and versatUity. This is especiaUy true when comparing somewhat similar systems having different depreciable lives. In such decisions, there are usuaUy other considerations besides economic, but if all other factors are equal, the alternative with the lowest total annualized cost should be the most viable. 

Installation of control systems may have a positive economic benefit which will offset a portion of their cost (2). Such benefits include (1) tax deduction provisions, (2) recovery of materials previously emitted, (3) depreciation schedules favoring the owner of the source, and (4) banking or sale of the emission offset credits if the source is in a nonattainment area. 

Depreciation. This is a noncash cost that accumulates money to rebuild the facilities after the project life is over. There are usually two depreciation rates. One is the corporation s book depreciation, which reflects the expected operating life of the project. The other is the tax depreciation, which is usually the maximum rate allowed by tax laws. To be correct, the tax depreciation should now be called Accelerated Capital Cost Recovery System (ACRS). 

Schropp and Zeman [11] have classified current production systems for amorphous silicon solar cells. They argue that cost-effective production of solar cells on a large scale requires that the product of the deposition time needed per square meter and the depreciation and maintenance costs of the system be small. Low... 

Salvage value of the whole seasonal storage S = 50,000 Useful life of the system n = 15 years depreciation over 10 years Discount rate i = 8%... 

When the government wishes to encourage construction it can give permission for a fast tax write-off. This means the company can depreciate the plant much faster than it will wear out. This practice has been prevalent in war years when the government needed to have certain defense plants built. It has been proposed that this method might be used to encourage companies to install pollution-reducing systems. 

In determining the total amount of depreciation an estimate must be made of the value of the asset when it is taken out of service. This is called the salvage value. Usually before an item can be sold it must be disconnected and removed from the system. When the cost of these operations is subtracted from the salvage value, the net salvage value is obtained. The total amount to be depreciated is then the original cost minus net salvage value. 

FIGURE 4.21 Each line represents a decrease of cost attributed to purchasing, depreciating, and operating an LCnMS system at the utilization rate. The system is assumed to operate as an LQMS system at other times. 

Property other than buildings (18-year property) placed into service at the present time must use the modified accelerated cost recovery system (MACRS) in calculating depreciation. Property is classified as having 3, 5, 7, 10, 15, or 20 years life. Some examples are ... 

Deposition technology, thin film, 23 6-7 Deposits, cooling system, 26 138 Depreciation, 9 539 book-basis, 9 540... 

Sometimes, in different systems, the oxygen presence is undesirable because of its reactivity and tendency to oxidize the contact materials that leads to corrosion of metallic materials or depreciation of food quality. Also oxygen could inhibit different chemical reactions or could interfere in different analysis (RES, polaroghaphy, etc.). 

Table 6 gives the annual costs calculated for the systems stated in Table 5. The calculation takes into account the following percentage for depreciation, interest and maintenance ...

The reaetive filters suffer from hydraulic blockage due to ealeite crystal staining of the filter granules. Additional equipment (compressors for pressurized air with which the filters ean be periodieally baek-flushed) had to be installed. Not only does this lead to higher eosts due to depreciation of the equipment and more manpower, but also is ineonsistent with the overall coneept of a passive, maintenanee-ffee system. 

The current methods for determining aimual depreciation charges are the straight-line depreciation and the Modified Accelerated Cost Recovery System (MACRS). In the straight-line method, the cost of an asset is distributed over its expected useful life such that the annual charge is... 

Example 10 Choice among Alternatives Two filters are considered for installation in a process to remove solids from a liquid discharge stream to meet environmental requirements. The equipment is to be depreciated over a 7-year period by the straight-line method. The income tax rate is 35 percent, and 15 percent continuous interest is to be used. Assume that the service life is 7 years and there is no capital recovery. Data for the two systems are as follows ... 

A pilot-scale demonstration remediating harbor sediment was conducted 1 year before the SITE demonstration. Based on the pilot-scale demonstration, the processing costs for a fuU-scale, 110-ton/day unit were projected to be 230/ton (September 1992 U.S. dollars). It is assumed that the unit will be down approximately 30% of the time for maintenance and design improvements in the first year of operation. Based on this system availability, 28,105 tons can be processed in one year. This cost included estimates for variable costs, fixed costs, and deprecia-tion/insurance. Variable costs include diesel fuel for a mobile generator, hydrogen, and caustic. Fixed costs include labor diesel fuel for pumps, heaters, process equipment, and instrumentation propane, water and sewer and parts and supplies. Depreciation/insurance costs include capital cost depreciated over a 3-year period, general insurance costs, and pollution liabihty insurance. This analysis does not include costs for setup and demobilization (D128007, pp. 5.12-5.14). 

In 1991 the vendor estimated the cost of thermal desorption technology to be approximately 80 per ton of soil treated, based on a system that treats soil with 20% moisture content at a rate of 10 tons per hour. This cost includes 20 per ton for depreciation and 60 per ton for labor, utilities, fuel, materials and supplies, and administrative costs (D12872N, p. 44). 

The various products are classified into 3-, 5-, 7-, 10-, 15- and 20-year groups in the modified accelerated cost recovery system (MACRs) in the US in 1986. The annual depreciation prescribed by the MACR system is given in Table 5.2. Some typical products belonging to various classes are noted in Table 5.3. 

Example 2 A paint system costing 0.38 per sq. ft failed after 4 yr. (a) If the paint system is renewed at the same cost for a total life of 12 yrs. Calculate the annual cost, assuming the first application is capitalized and those in the 4th and 8th years are expenses, interest rate of 10%, tax rate of 48% and straight-line depreciation. 

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