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What is a depreciation report?


"A Reserve Study (Depreciation Report) calculates the risk of special assessments and discloses unfunded liabilities to the owners and to prospective buyers."

The condominium home owners of BC have published an excellent summary document on depreciation reports. Depreciation reports are a legislated planning requirement for strata corporations in British Columbia. Depreciation reports are used to establish long term planning for common property and common assets to determine:


1) What assets you own (an inventory.)
2) The asset condition (evaluation.)

3) When things need to be replaced (the anticipated maintenance, repair and replacement.)
4) How much money you currently have (contingency reserve report.)
5) What it is likely to cost for future replacement (a description of the factors and assumptions in projecting costs.)
6) How you are going to pay for the costs (three cash flow models projecting 30 year replacement periods.)


"A Depreciation Report is not only about the replacement of building components. It it also about "Major Maintenance" activities to preserve the assets so that we can leverage their full service life. This is one of the biggest misconceptions in the industry at this time."


The regulations have set out requirements for time periods of the reports, qualifications of persons providing reports, schedules for updates, disclosure of reports, conditions of the reports and what information must be contained and financial planning and disclosure.



A Reserve Study (Depreciation Report) should reflectall the primary physical systems of a building.


 

To download this very informative summary document covering all aspects of depreciation reports click this hotlink and save the full depreciation report summary document as a PDF to your computer. Or contact Graham at graham@bavington.ca or visit his website at www.bavington.ca and he will email you the depreciation report PDF as an email attachment.


 

http://www.choa.bc.ca/_members/_pdf/400/400-007_Depreciation_reports_2011.pdf

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