The 2019 water revenue requirement has been reduced to reflect a decrease of approximately $7 million in depreciation expense, compared to the adopted 2018 depreciation expense, due to a reduction in the overall
composite depreciation rates based on a revised study filed in the general rate case.
Composite depreciation is a method that entails grouping property items and applying an average estimated useful life to each asset group for depreciation purposes.
Given the relative ease with which inexpensive accounting software can track depreciation for individual assets, however, composite depreciation is not as attractive an alternative as it once was, which may explain its rare usage today.
The matrix is insufficient for conveying stresses to filaments, which aren't being bound up between each other with the matrix, and that is the reason for the
composite depreciation.
Background The present law
composite depreciation life of 27.5 years for apartments may be too long.
By requiring that different functional units not be depreciated as one asset, AcSEC eliminates the option of using
composite depreciation. With
composite depreciation, the average useful life of the different assets in a group is calculated and the group's assets are depreciated over that average life.
The combination of: (1) the existing capital gains taxes; (2) a depreciation recapture rate of 25 percent; and (3) a
composite depreciation life of 27.5 years for new and used apartment investment have led to a steady decline in the number of apartments available to meet the nation's housing demand.