Typical glider depreciation?

What is a typical depreciation value for gliders that clubs/owners use
in accounting for the cost of gliders? Do you assume linear
depreciation?
(This is a difficult value to estimate, given the lack of easily
available data for second-hand glider prices throughout a reasonable
time span.)

On 8/7/2011 8:57 PM, David Reitter wrote:
What is a typical depreciation value for gliders that clubs/owners use
in accounting for the cost of gliders? Do you assume linear
depreciation?
(This is a difficult value to estimate, given the lack of easily
available data for second-hand glider prices throughout a reasonable
time span.)
It depends and the tax rules vary frequently, including some special
qualifiers. If a choice is available, selection might be based on state
personal property/tangible tax obligations and whatever implications
might be tied to disposal and recapture.

http://www.aviationattorneys.com/air...deductions.htm
http://www.advocatetax.com/depreciation/formDepSav.php

For the USA -- Gliders are aircraft and the IRS says that the
depreciation schedule for an aircraft is 5 years (and only 5 years).

The only way to depreciate it faster is by having your accountant take
advantage of special "bonus depreciations plans" that are sometimes
made available by the government.

If you feel that your glider will depreciate (to a zero value) over a
much longer period than the standard 5 years (as we all know is the
case), it is legal to start with the purchase value and establish a
"risidual value" at the end of the 5 years. The determination of this
residual value is up to you (and your accountant) as long as it is
based on some reality.

for example: $50,000 starting value (purchase price) - $30,000
risidual value = $20,000 in "accounting value" lost in 5 years.

Then your accountant can legally show $20,000 in depriciation over the
first 5 years ($4,000/year). At the beginning of the 6th year you
start over using the $30,000 "balance" as a starting point to reset
the calculation -- all $30,000 over years 6-10 or set up a new
residual value and keep going until all the value is depreciated.

You and your accountant would analyze both scenarios to determine
which method was the most "correct" for your particular glider and
your particular accounting situation. Obviously, your yearly tax
situation will be influenced by the depreciation method you choose.

Steve

Disclaimer -- the above is not accounting or legal advise. You
accountant should be consulted to ensure that your plan of action is
both legal and conforms to the "best accounting practices" that we
should all strive to achieve.

Assuming you're interested for valuation reasons, rather than US tax
ones...

I did some sums on the depreciation in real terms of an ASW20 over25
years, and got the answer of about 2.3% per annum.

This was based on finding an original 1984 price of $28,000 for an
ASW20C, and approximate asking prices in 2009 of $33,000, then
depreciating according to the retail price index (US, I think, though
I don't recall where I got that from).

Could do with some more data points though.

Paul

On Aug 10, 8:13*am, Paul Ruskin wrote:
Assuming you're interested for valuation reasons, rather than US tax
ones...

I did some sums on the depreciation in real terms of an ASW20 over25
years, and got the answer of about 2.3% per annum.

This was based on finding an original 1984 price of $28,000 for an
ASW20C, and approximate asking prices in 2009 of $33,000, then
depreciating according to the retail price index (US, I think, though
I don't recall where I got that from).

Could do with some more data points though.

Paul

Depreciation of the value of gliders - especially European built - has
been offset by the depreciation of the US dollar, which has dropped
from around 0.8 to the Euro to over 1.4. This has nearly doubled the
dollar cost of new gliders imported from Europe into the USA in the
past ten years. This depreciation of the dollar has led to much less
drop in value of gliders as they age in the US market.

Mike

That's a fair point Mike. Let's try and collect some data.

Would people be prepared to post what they paid for their gliders in
the past (Sterling, Euros, Dollars)? Further back the better. Then
we could get some idea of actual depreciation, and take account of
currency variations.

Paul


On Aug 10, 4:56*pm, Mike the Strike wrote:
On Aug 10, 8:13*am, Paul Ruskin wrote:

Assuming you're interested for valuation reasons, rather than US tax
ones...

I did some sums on the depreciation in real terms of an ASW20 over25
years, and got the answer of about 2.3% per annum.

This was based on finding an original 1984 price of $28,000 for an
ASW20C, and approximate asking prices in 2009 of $33,000, then
depreciating according to the retail price index (US, I think, though
I don't recall where I got that from).

Could do with some more data points though.

Paul

Depreciation of the value of gliders - especially European built - has
been offset by the depreciation of the US dollar, which has dropped
from around 0.8 to the Euro to over 1.4. *This has nearly doubled the
dollar cost of new gliders imported from Europe into the USA in the
past ten years. *This depreciation of the dollar has led to much less
drop in value of gliders as they age in the US market.

Mike

On Aug 10, 11:56*am, Mike the Strike wrote:
On Aug 10, 8:13*am, Paul Ruskin wrote:

Assuming you're interested for valuation reasons, rather than US tax
ones...

I did some sums on the depreciation in real terms of an ASW20 over25
years, and got the answer of about 2.3% per annum.

This was based on finding an original 1984 price of $28,000 for an
ASW20C, and approximate asking prices in 2009 of $33,000, then
depreciating according to the retail price index (US, I think, though
I don't recall where I got that from).

Could do with some more data points though.

Paul

Depreciation of the value of gliders - especially European built - has
been offset by the depreciation of the US dollar, which has dropped
from around 0.8 to the Euro to over 1.4. *This has nearly doubled the
dollar cost of new gliders imported from Europe into the USA in the
past ten years. *This depreciation of the dollar has led to much less
drop in value of gliders as they age in the US market.

Mike

The export of gliders out of the US in this period has been fairly
brusque. Is there anyway to look at number of deregistered gliders
from the FAA database?

On Aug 11, 3:13*am, Paul Ruskin wrote:
Assuming you're interested for valuation reasons, rather than US tax
ones...

I did some sums on the depreciation in real terms of an ASW20 over25
years, and got the answer of about 2.3% per annum.

This was based on finding an original 1984 price of $28,000 for an
ASW20C, and approximate asking prices in 2009 of $33,000, then
depreciating according to the retail price index (US, I think, though
I don't recall where I got that from).

Accounting is done in nominal dollars, not CPI-adjusted dollars. So in
fact from an accounting point of view you've seen 0 depreciation. In
fact less than 0.

Of course gliders will eventually wear out. If you are looking at
buying a shiny new one then it doesn't seem unreasonable to assume an
economic working life of at least 30 - 40 years, if not longer. A
Discus or Grob Twin from 1980 is still worth good money, and every
LIbelle's and Cirruses from around 1970 are in perfectly good working
order still and worth a lot more than zero.

I don't see any reason to think that a DG1000 or Duo will fare any
worse.

On Aug 7, 8:57*pm, David Reitter wrote:
What is a typical depreciation value for gliders that clubs/owners use
in accounting for the cost of gliders? * Do you assume linear
depreciation?
(This is a difficult value to estimate, given the lack of easily
available data for second-hand glider prices throughout a reasonable
time span.)

The info is available.

For example, if you are interested in a Std. Libelle 201, go to the
Soaring Mag archives look in the classifieds, and see what a
particular sailplane was selling for in the 70's, 80's, 90's, etc and
you will get the general idea that will help you. The sailplanes
condition also plays into the equation.

Mike