Lesson 5 – Determining the Economic Life/Average Service Life of Equipment and Fixtures (Valuation of Personal Property and Fixtures)

Using Assessors' Handbook Section 581 (Equipment Index, Percent Good, and Valuation Factors)

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The exercises below are to be worked by participants to ensure comprehension of information discussed in this lesson. Additionally, it will help prepare certified property tax appraisers for the final examination that must be taken upon completion of this training session in order to receive appraisal training credit.

Before you start, please print the exercises using the “Print Questions” link below so you can work through the exercises on your own. After you work through the exercises, the solution can be viewed by clicking on the blue plus sign immediately following the question on the right hand side of the page. Additionally, when you have completed all the exercises, you may print all of the solutions using the “Print Questions with Answers” link below.

While all the exercises shown below use lien date 2011 for illustrative purposes, it must be remembered that it is the lien date for which values are sought that determines which AH 581 – and associated factors – will be used.


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Exercise 1

Determine the average service (economic) life to be used in estimating the RCNLD (Reproduction Cost New Less [normal] Depreciation) – market value – of the following equipment and fixtures, as of lien date 2011 (January 1).

Problem number Equipment & Fixtures Average Services Life (in years)
a. Hotel Furnishings  
b. Service Station Equipment (other than underground tanks)  
c. Electronic Equipment Manufacturing Machinery  
d. Plastics Manufacturing Machinery  
e. Construction Contractor Equipment (non-mobile)  
f. Demolition Contractor Equipment (non-mobile)  
g. Farm Equipment (non-mobile agricultural)  
h. Dairy Farm Equipment (non-mobile agricultural)  
i. Bank Counter Lines  
j. Cell Phone Tower  
k. Service Station Underground Tanks  
l. Sign  

  1. 8 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 14), row: Hotels & Motels (Furnishings), column: Life (in years).
  2. 12 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 16), row: Service Stations (excluding tanks), column: Life (in years).
  3. 10 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 14), row: Electronic Equipment Manufacturing, column: Life (in years).
  4. 15 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 15), row: Plastics Manufacturing, column: Life (in years).
  5. 12 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 13), row: Construction / Demolition Contractor, column: Life (in years).
  6. 12 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 13), row: Construction / Demolition Contractor, column: Life (in years).
  7. 15 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 12), row: Agricultural / Farm, column: Life (in years).
  8. 15 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 14), row: Dairies, column: Life (in years).
  9. 15 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 12), row: Banks (category 1, counter lines, etc.), column: Life (in years).
  10. 25 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 13), row: Cell Phone Tower, column: Life (in years).
  11. 25 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 16), row: Service Stations (underground tanks), column: Life (in years).
  12. 12 years = 2011 CAA Business Assessment Factors, Economic Life and Minimum Percent Good Table (page 16), row: Signs, column: Life (in years).

Exercise 2

What is the economic life (average service life), as of lien date 2011 (January 1), of retail department store equipment?

Economic Life (Average Service Life) = 12 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV, of the 2011 CAA Business Assessment Factors position paper (page 16).

Retail Store – Others [other than warehouse type] = 12 years

Exercise 3

What is the economic life (average service life), as of lien date 2011 (January 1), of a forklift?

Economic Life (Average Service Life) = 10 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV of the 2011 CAA Business Assessment Factors position paper (page 14).

Forklifts = 10 years

Exercise 4

What is the economic life (average service life), as of lien date 2011 (January 1), of furniture manufacturing equipment?

Economic Life (Average Service Life) = 15 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV of the 2011 CAA Business Assessment Factors position paper (page 14).

Furniture Manufacturing / Wood Working = 15 years

Exercise 5

What is the economic life (average service life), as of lien date 2011 (January 1), of sheet metal manufacturing equipment?

Economic Life (Average Service Life) = 15 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV of the 2011 CAA Business Assessment Factors position paper (page 16).

Sheet Metal Manufacturing = 15 years

Exercise 6

What is the economic life (average service life), as of lien date 2011 (January 1), of a diesel fired heater (non-mobile construction equipment)?

Economic Life (Average Service Life) = 12 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV of the 2011 CAA Business Assessment Factors position paper (page 13).

Construction / Demolition Contractor = 12 years

Exercise 7

What is the economic life (average service life), as of lien date 2011 (January 1), of farm equipment (non-mobile agricultural equipment)?

Economic Life (Average Service Life) = 15 years

Locate the economic life (average service life) corresponding to the equipment type, using the Economic Life and Minimum Percent Good Table, in Section IV of the 2011 CAA Business Assessment Factors position paper (page 12).

Agriculture / Farm = 15 years

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