Personal Property Tax: County Bulletin
| TO: ALL COUNTY AUDITORS - Bulletin No. 198
November 16. 1964 FROM: Louis J. Schneider. Jr. Tax Commissioner RE: Computing True Value of Furniture, Fixtures and Equipment of Hotels and Motels Bulletin No. 124. issued April 8. 1958, Is hereby amended to substitute a valuation method for furniture, fixtures and equipment of hotels and motels. The exhaustion method continues in effect for the valuation of furniture, fixtures and equipment of retail and other establishment where book records are maintained on this method or where book records do not include all such items still on hand and in use or held for use. Assuming that hotels and motels begin business with a fixed floor area completely furnished, later acquisitions are primarily replacements. If complete and accurate figures are not available, replacement allowance can be computed and substituted for disposal values in the 302 True Value Computation, by the application of standard equipment cost indexes. A replacement allowance percentage, obtained by dividing the former year cost index by the current year cost index, is applied to the cost of the current acquisition to determine the replacement allowance for the property replaced. For example. If a $5, 000 furniture purchase replaces twelve-year-old furniture, and the cost index of twelve years ago is 79% of the cost Index of the current year, the replacement allowance to 79% of $5,000 or $3, 950. Each year's acquisitions are considered as replacements of oldest items not yet offset by prior replacement allowances. By converting the cost of the new items into equivalent costs of the past years, through the cost-index percentage. disposals of old items are credited at the computed replacement allowances. This method to the reverse of the common appraisal practice of computing present replacement costs of property. The following sample computations and cost Indexes for hotel and motel equipment for the years 1925 through 1963 and the first half of 1964 illustrate the method to be used. COST INDEXES FOR HOTELS AND MOTELS Year Cost Index Year Cost Index Year Cost Index Year Cost Index 1964* 220.3 1954 174.9 1944 102.7 1934 72.9 1963 219.5 1953 174.2 1943 100.8 1933 71.5 1962 217.1 1952 172.8 1942 100.1 1932 68.5 1961 215.4 1951 173.5 1941 93.6 1931 72.8 1960 214.3 1950 160.9 1940 88.8 1930 83.3 1959 212.7 1949 153.6 1939 85.2 1929 89.1 1958 210.9 1948 160.5 1938 82.8 1928 94.8 1957 206.7 1947 148.6 1937 85.2 1927 95.3 1956 195.8 1946 120.6 1936 81.2 1926 100.0 1955 181.5 1945 103.8 1935 77.7 1925 107.8 *Six Month Index - 1964 APPLICATION What was the cost of furniture acquired in 1951 which was replaced in 1963 at a cost of $5, 000 ?
79% of $5, 000 (1963 cost) = $3,950 as 1951 cost TRUE VALUE COMPUTATION
TO : ALL DISTRICT MANAGERS DATE: February 6, 1978 FROM: Thomas R. Nourse, Admin. Asst., Property Tax Division RE: County Auditor Bulletin No. 198 ATTN: Property Tax Supervisors The following is a summary and update of all the cost indexes established since the issuance of the bulletin, November 16,1964. Year Cost Index
TRN/pj cc: Jim Witzel
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