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Estimating Economic Service Life of Assets by Using National Wealth Statistic  

Cho, Jin-Hyung (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology)
Oh, Hyun-Seung (Dept. of Industrial & Management Engineering, Hannam University)
Lee, Sae-Jae (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology)
Suh, Jung-Yul (Dept. of Industrial & Systems Engineering, Kumoh National Institute of Technology)
Publication Information
Journal of Korean Society of Industrial and Systems Engineering / v.30, no.4, 2007 , pp. 170-181 More about this Journal
Abstract
The purpose of computing economic depreciation value is to find valuation of assets closely in line with market prices. The valuation of industrial assets are called Engineering Valuation. The two representative techniques for such valuation are Hulten-Wykoff Method, which estimates real value using regression equations, and T-factor Method devised at Iowa State University. The two are all empirical methods for computing service life (duration period). In this paper, we derived the service life by empirical methods using national wealth statistics, and also by more conventional methods such as original group method and retirement method. The results from each method are compared with one another. We also computed economic service life from these results. In S. Korea where amount of asset value statistics is still insufficient, the most effective method for empirically computing economic service life turns out to be the one using national wealth statistics. In addition, we also present economic relationship between depreciation value computed by using Hulten-Wykoff Method and depreciation value computed by using T-factor Method.
Keywords
National Wealth Statistics; Hulten-Wykoff; T-factor; Service Life;
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