We plan to determine a replacement cost value (RCV) for our personal property inventory items that include the price of the item, the shipping cost, and tax. When determining the actual cash value (ACV) from the RCV, it is our understanding that tax should not be depreciated. Is that correct? Should the shipping cost be depreciated as well as the price of the item?
As far as the amount of depreciation to apply, we plan to use the following condition categories to arrive at the ACV.
Excellent – Depreciate RCV by 10%
Very Good – Depreciate RCV by 20%
Good – Depreciate RCV by 35%
Fair – Depreciate RCV by 50%
Poor – Depreciate RCV by 80%
Is this a reasonable amount of depreciation to apply?