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Fendt depreciation per hour
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<blockquote data-quote="Grass And Grain" data-source="post: 5584722" data-attributes="member: 23184"><p>True, cost to change is not depreciation. But...</p><p></p><p>I don't think you can consider depreciation on its own as a cost/expense to the business.</p><p></p><p>If the brexit vote had gone the other way and currency hadn't devalued, then the depreciation of a tractor purchased pre brexit vote would have been higher right now. For your tractor it might be say £15 rather than £12/hr, but the replacement cost would have been lower than it is currently.</p><p></p><p>I think depreciation of the old tractor <u>and</u> cost of the new one should both be considered together. As far as I see it, the two things are associated.</p><p></p><p>Imagine if there's a brexit deal and the pound strengthens 20% overnight, a new tractor will reduce in price by 20% and the value of your old one will also drop, thus increasing its depreciation £/hr cost.</p><p></p><p>On a practical point, what could be really bad would be buying a new tractor right now, pound strengthening on 19th March 2019 and that tractor devaluing massively.</p><p></p><p>The more I think about it, the more I become of the opinion that cost to change is a more (or at least equally) useful metric than depreciation of an individual machine. It does make me scratch my head though</p></blockquote><p></p>
[QUOTE="Grass And Grain, post: 5584722, member: 23184"] True, cost to change is not depreciation. But... I don't think you can consider depreciation on its own as a cost/expense to the business. If the brexit vote had gone the other way and currency hadn't devalued, then the depreciation of a tractor purchased pre brexit vote would have been higher right now. For your tractor it might be say £15 rather than £12/hr, but the replacement cost would have been lower than it is currently. I think depreciation of the old tractor [U]and[/U] cost of the new one should both be considered together. As far as I see it, the two things are associated. Imagine if there's a brexit deal and the pound strengthens 20% overnight, a new tractor will reduce in price by 20% and the value of your old one will also drop, thus increasing its depreciation £/hr cost. On a practical point, what could be really bad would be buying a new tractor right now, pound strengthening on 19th March 2019 and that tractor devaluing massively. The more I think about it, the more I become of the opinion that cost to change is a more (or at least equally) useful metric than depreciation of an individual machine. It does make me scratch my head though [/QUOTE]
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Fendt depreciation per hour
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