WP115 Tax Benefits of Rack-based Power and Cooling equipment

Accounting and Tax Benefits
of Modular, Portable
Data Center Infrastructure
White Paper 115
Revision 1

by Barry Rimler

Contents
> Executive summary Click on a section to jump to it

Introduction 2
Well-informed accounting treatment of data center
physical infrastructure (DCPI) assets provides signifi- “Traditional” vs. factory-built
cant opportunities to contribute to improving the 2
solutions
financial performance of a business, institution, or
organization. Design and manufacturing improve- Understanding property taxes
3
ments in modular, scalable UPS systems, power distri- and related government fees
bution units (PDUs), and computer room air condition- Financial planning for DCPI
ers have not only created technological benefits, but 5
assets
provide entirely new DCPI asset management oppor-
tunities with direct and measurable financial benefits. Implementation of an asset
management strategy for 6
DCPI

Conclusion 9

Resources 10

Appendix 11

Accounting and Tax Benefits of Modular, Portable Data Center Infrastructure

Introduction This white paper is provided to highlight the opportunities and benefits of involving a finance
or tax professional who is knowledgeable in the acquisition and deployment of data center
physical infrastructure (DCPI) assets. Applying the accounting options available within the
framework of what is known as Generally Accepted Accounting Principles (GAAP), DCPI
assets may be better aligned with the goals and objectives of a particular business, institu-
tion, or organization. This document is not intended to provide or offer advice on tax
planning, as only a qualified or certified financial professionals may actually provide tax
advice.

Among the difficulties faced by owners of DCPI assets, is the absence of perceptive financial
treatment of the individual portions of mission critical systems. Frequently, the UPS, power
distribution unit (PDU), and branch circuit panels installed in the construction of a building (or
as a major "improvement project“) will be booked as a "building improvement" and depreci-
ated along with the concrete, steel, boilers and pipes of the building. The "building" will likely
have a long depreciable life, which may be upwards of 30+ years. However, DCPI equipment
typically has a relatively short useful life, even though the UPS, PDU, and related branch
circuits may remain on the books long after they are declared obsolete. For many compa-
nies, improper booking of high technology DCPI such as UPS systems and PDUs routinely
causes substantial problems in the form of overstated “real property” asset value, and the
obligation to take a "write-down" in the year that the UPS and related parts are "retired". A
glossary is provided in the appendix of this paper to define various terms used throughout.

Recent improvements in the design and manufacture of DCPI equipment, particularly UPS
systems, PDUs, and (to some extent) air conditioning, has opened up the opportunity to treat
DCPI as “business equipment”, rather than a part of the building in which the equipment is
installed. This achievement is the direct result of scalable, modular, and fully manufactured
systems requiring little or no field wiring other than the connection of the input power (which
may be accomplished through “cord and plug connected” means).

This improved DCPI works well in a dynamic business climate where technology changes
frequently and economic cycles and leaseholds may be substantially shorter than real estate
investment periods. The integration of this DCPI into a corporation, institution, or organiza-
tion’s economic model is not difficult, because nearly all corporations, institution, or organiza-
tions have experience with the management of business equipment, including computers,
copy machines, production machinery, and company owned vehicles.

“Traditional” vs. “Traditional” or “legacy” UPS and PDUs
factory-built While all UPS systems and PDU sub-assemblies are manufactured in a factory, the complex-
solutions ity and intensity of the connection activities performed in the field to install a traditional (or
legacy) UPS system generally promotes the inclusion of the UPS, along with the PDU and
branch circuits into the realty. They may be categorized as either a “building improvement” or
a “leasehold improvement”.

A traditional UPS system (consisting of a UPS module, battery cabinet, and various out-board
switches) is more than likely installed as a part of the building’s electrical system, and booked
as a building improvement, in the case of an owner occupied property, or as a leasehold
improvement in property secured under a lease.

While it is possible to apply different depreciation schedules to the UPS batteries, doing the
same for the UPS system isn’t as simple, since it is difficult to financially determine where the
UPS system ends and where building components such as transformers and switchgear

APC by Schneider Electric White Paper 115 Rev 1 2


begin. Consequently, the traditional UPS system becomes merged with the rest of the
building’s electrical systems, even though it has a substantially shorter useful life.

The traditional UPS, PDU, and branch circuits therefore are declared part of a construction
job and then part of the “real estate”. Building improvements, particularly “built in place
building improvements” are always subject to permits, inspection delays, and inspection fees.

Factory-built solutions
“Factory built” UPS systems ship with factory wired PDUs, in which the branch circuit
distribution is fully developed and furnished. This type of system saves exceptional amounts
of field installation time, particularly if the entire system is part of a cord and plug connected
solution. Such systems can be booked and depreciated as business equipment, and taxed
as “personal property”, (like a free-standing refrigerator or desktop computer) without permit
or inspection fees for the factory built portion. This enables shorter depreciation schedules.
This distinction may be useful to certain clients that see a benefit in separating higher
technology assets from the real estate or "base building", and assigning a unique "life" to
their business equipment, which may be substantially different than the lives assigned to
long-life assets such as "bricks and mortar", chillers, pumps, and boilers.

Factory built solutions, such as APC by Schneider Electric’s InfraStruXure are purchased by
the client, delivered to the site, and connected to the power supply by a single cable1 or (big)
cord and plug assembly. Therefore, the value of the factory built solution is generally not
required to be included in the contractor's electrical permit for the job. The electrical contrac-
tor will take the permit for the portion of the job that the contractor actually builds or wires on
site 1.

Factory built solutions are UL listed as an entire end-to-end system, and not built in the field
from individual components (like a UPS, PDU and branch circuit system). If treated as
"business equipment" like a refrigerator or a computer, and not as a "building improvement",
a factory built solution should not be subject to local permit fees and inspection. Inspection
fees are usually in the range of 2%- 3% of the value of all of the components and labor
representing a trade contractor's contract.

Other (very large) factory built solutions may be booked in part as business equipment, and
in part as a real asset, to suit a client’s business strategy. An example of this is APC’s
InfraStruXure for large data centers, where the UPS is incorporated and merged with the real
property while the power distribution and racks are treated as “business equipment”.

Understanding For all businesses, institutions, and organizations that are required to pay taxes and govern-
ment fees, there is an obligation to pay real estate taxes, personal property taxes, and
property taxes income taxes. Renters of an office, retail space, or manufacturing facility may not directly
and related pay real estate taxes, but real estate taxes are a definite part of the rental or lease payment.
government fees Assets used to house or operate a business (other than financial instruments associated with
a company’s debt and equity) are either “real property” or “personal property”.

Real property
Most cities and towns rely on property taxes also known as real estate (or real property)
taxes to fund general government services, which may or may not include the public schools,

1
Check with your contractor as to the local rules which may be more stringent for "hard-wired" business
equipment than "cord and plug" connected business equipment.



as sometimes schools have taxing authority of their own. Generally, real property taxes are
determined through an assessment process, which ordinarily includes periodic real property
appraisals, conducted by a professional appraiser reporting to the tax assessor. It is the
appraiser’s responsibility to determine the value of a piece of real property.

When DCPI equipment is placed on the corporate books as a “building improvement”, it
typically becomes part of the taxable basis of the real estate. Also, since real property is
ordinarily taxed, based on assessed values, the value in between assessments may be
increased as a result of successive "building permits". Owner occupied buildings with
massive electrical / mechanical equipment and older traditional UPS systems tend to reflect
inflated asset values (and have levels of taxation), substantially out of line with the (market)
value of the real estate.

For many companies, booking high technology DCPI such as UPS systems and PDUs as
“real property” causes a substantial problem (in the form of a "write-down") in the year that
the UPS and related parts are "retired".

The appraiser uses several methods to determine value, which include:
(1) Market value: determined by researching the values received by sellers of similar
properties in the area (2) Rental value: calculated by utilizing average rents and occupancy
levels over various capitalization periods to determine what an investor might pay for the real
property (3) Book value: determined by the appraiser using the asset values which include
land, building and improvements carried on the corporate books of the owner of the property

The appraiser issues a valuation to the assessor, subject to appeal by the real property
owner, based on a combination of the methodologies. The valuation is then subject to the
town’s assessment formula that will tax a standard percentage of the assessed value of the
property, at a mil rate that the city or town regularly sets. Between appraisals, the assessed
value of a piece of real property may be adjusted upward, but is rarely adjusted downward, in
response to each permit that is filed for architectural, structural, electrical, plumbing, heating ,
cooling, and mechanical improvements.

Personal property
Personal property taxes function similarly to real property taxes, except the taxable assets
are pieces of business equipment, or “personal property”. The property taxed through
personal property taxes can vary from automobiles to computers, but generally, these assets
have relatively short useful lives, and are declared (usually annually) by the business, in the
form of a “list or schedule”, providing a simplified annual opportunity for revision. This allows
businesses, institutions, and organizations to reflect movement of their assets between towns
and cities, and provides flexibility to reflect the “disposal” of assets throughout growth and
down-sizing cycles.

Corporate income
Whether required by a local, state, or federal government, corporate income taxes are levied
on the income of a business, institution, or organization (that is required to report income to
the respective governmental entities). Taxation of corporate income, along with all other
(personal) income taxes, support the provision of public facilities and services, along with the
operations of “departments” (such as the Department of Defense, the Department of Envi-
ronmental Protection, etc.), that carry out the policy of those governments.
Income tax, as a general category, and corporate income taxes, in particular, are part of a
dense and complex system of laws, codes, and decisions. Aside for providing revenue for
the operation of governments, the underlying system of income taxation is designed to carry
out strategic governmental policies through permitted tax deductions and allowances, such as



tax credits for new plants and deductions for the purchase of new production assets, includ-
ing allowances to accelerate depreciation for new, qualifying business equipment.

Government inspection fees
Of the many government fees associated with owning real property or being a tenant in the
real property, are inspection fees. Inspection fees accompany any building improvement
activity or project where a contractor performs work. In theory, the inspection process is one
of several consumer protection measures designed to protect the contractor’s customer and
the public from failures of the contractor to perform work according to the codes adopted by
the city or town. In conjunction with code making, which establishes the rules a contractor
must follow, and licensing which grants a contractor the privilege of practicing a profession in
a particular jurisdiction, inspection serves as a quality control process.

Inspection fees are charged as a percentage of the value of a contractor’s contract. The
percentage is set locally but is usually in the 2%-3% range. Inspection fees are actually
intended to cover the portion of a construction or improvement project which is “built in the
field” and “will become part of the real property”, however business equipment and personal
property frequently get caught in the net, either through inattention or overly aggressive
inspection practices.

Financial Financial managers and management practices
planning for While DCPI assets are frequently purchased at the request of an IT professional or a facilities
DCPI assets manager, often the “life of the new asset” fails to get linked to a business, institution, or
organization’s practices for the “booking of assets”, despite having individuals who are well
versed in accounting principles and tax issues. Without direct guidance, DCPI assets
generally get booked to the realty or placed as a leasehold improvement, which is the
traditional way to book and depreciate DCPI. This may be a costly mistake.

Modular factory built DCPI solutions in the hands of a resourceful alliance of IT, facilities, and
financial personnel can make a substantial impact on data center reliability and a welcome
contribution to the asset management and tax efficiency of their business, organization or
institution. The booking of assets is usually a one-time opportunity to plan the financial and
accounting future of newly acquired DCPI. Accurate assessment of the life of DCPI equip-
ment reduces the chance of expensive “write-downs” later.

Fixed asset accounting
Fixed asset accounting is a form of financial management and is generally performed
somewhere within a corporate or organizational structure. Fixed asset accounting fulfills a
strategic or statutory function, and is related though different than accounting performed by
asset managers who frequently deal with the same financial issues from a transactional
perspective. Accountants handling fixed asset issues are responsible for the real property
and personal property taxes, however more often than not, these financial professionals are
not invited to IT equipment discussions, DCPI asset planning sessions, and meetings that
develop the combined deployment strategies.

It is assumed that the financial management professional fulfilling the company’s “fixed asset
accounting” responsibilities knows what to do with all of the DCPI assets. However, few of
these financial professionals have had exposure to factory-built DCPI products and solutions,
and consequently are unable to use their knowledge of fixed asset accounting to the fullest
benefit of their company. Once presented with an overview of factory-built DCPI, fixed asset



accountants will recognize the tax and accounting options, in relation to generally acceptable
accounting principles (GAAP), and the company’s internal rules and objectives.

Asset management practices
Whether practiced by asset managers, IT professionals, or facility managers, asset manage-
ment practices used by many businesses were developed and documented many years
before the advent of modular, scalable factory-built UPS systems, PDUs and related equip-
ment. During that period of time, all DCPI was considered as “fixed in place” or “building
equipment”. The “fixed in place” designation limits the equipment to treatment as “building
improvement” in the case of owned property, and a “leasehold improvement” in the case of a
rental. In either case the opportunity is missed, to account for UPS systems, PDUs and
related equipment as “business equipment” that is managed as “personal property”.

Modular, scalable, factory-built DCPI solutions provide for “asset reuse and portability”. This
provides IT professionals and facility managers the ability to deploy and redeploy DCPI in
response to changes in business or upon the conclusion of a lease, reducing the cost of
abandonment in place, or the necessity to write down a “stranded asset”, or cause the asset
to inure to a landlord as a leasehold improvement. This benefit is realized by facility manag-
ers or asset managers who develop “rent-rates”, benchmark their facilities against the
facilities of other companies, and plan capital improvement. IT departments receive the
direct benefit, because real estate taxes and depreciation are a large part of rents applied to
IT space, collectively only second to energy costs.

Implementation Managing the tax and operational benefits of all DCPI, including “fixed in place” and modular,
scaleable, factory built DCPI is part of an overall asset management strategy for DCPI.
of an asset Accordingly, the astute accounting treatment of DCPI assets provides significant opportuni-
management ties to contribute to improved financial performance of a business, institution, or organization,
strategy for DCPI by involving financial professionals with intimate knowledge of asset management and fixed
asset accounting in the selection process of new DCPI. The most successful deployment of
DCPI can therefore be achieved by a collaborative team including IT professionals, facility
managers, and financial professionals.

Step 1: Needs assessment
It is very likely a needs assessment for new DCPI has already been very accurately per-
formed very early in the life of a planning cycle for establishment or improvements to a data
center or network room. Generally, the requirements for floor space, rack capacity, and
power and air conditioning are known prior to beginning the selection process for the DCPI to
support the data processing requirements.

Step 2: Life cycle assessment
Of equal importance to knowing the DCPI needs of a particular data center or network room,
it is important to understand the expected life cycle of the installation. While it is arguably
difficult to assess life-cycle in an owned location where data center or network room life is
potentially open-ended, in locations secured by leases, the life cycle should never be
expected to be longer than the lease for “traditional” fixed-in-place equipment, though may be
longer for modular, scaleable, factory built DCPI that is intended to be moved at the end of
the lease.



Step 3: Construction programming
When traditional fixed in place DCPI is compared to modular, scaleable, factory built DCPI
the relative cost of construction should be compared. While traditional fixed in place DCPI
ordinarily requires separate electrical or UPS rooms, modular, scaleable, factory built DCPI
may generally be located on the computer room floor and not require a separate UPS room.
There are construction savings associated with building fewer separately demised spaces.
These savings include not only the cost of the room, but also the aisle ways and common
spaces. Costs vary by location, but may be in the range of $18 to $35 per square foot 2 in
office-building settings, and well beyond $75 per square foot2 for medium size and large
standalone data centers.

Step 4: Construction schedule
Fast construction schedules overwhelmingly benefit from modular, scaleable, factory built
DCPI. Not only is engineering time and costs mitigated in direct proportion to the amount of
DCPI delivered as finished products (ready for installation), but inspection fees and inspec-
tion delays will be reduced. As mentioned previously, inspection fees are generally between
2% and 3% of the cost of the field constructed portion of a project, which may include a
“fixed-in-place” UPS or PDU, but not a modular, scaleable, factory built UPS and PDU.

Step 5: Operational programming
Managers of nearly all types of buildings used by businesses, institutions, and organizations
have a means of calculating and assigning occupancy costs. Whether incorporated in lease
costs for rented space or developed by facility managers who handle a business, institution,
or organization’s own property, occupancy costs invariably include the cost of taxes, insur-
ance, maintenance, security, cleaning, grounds maintenance, energy, depreciation (or some
form of debt service) and common area expenses. Therefore, every square foot of space
within a building carries a calculable cost.

An installation using modular, scaleable, factory built DCPI is likely to use less building
square footage than a traditional system with a separate UPS room. Even though the cost of
computer room space sometimes carries higher square foot values than UPS room space,
inefficiencies associated with minimum room sizing within a building, aisles and common area
allocations make having a separate UPS room a disproportionately expensive option in all but
larger data center and network room installations.

With base rents that (depending on the local real estate market) can easily range between
$19 and $50 per square foot, along with "additional rent" that is typically added to cover
incremental property taxes, utilities, and "common area expenses", modular, scaleable,
factory built DCPI solutions can consistently be expected to produce the most economically
efficient data center, for the entire life of the data center. The same concept is applicable in
owner occupied buildings where instead of "rent", "corporate allocation formulas", generally
perform the same function.

Step 6: Asset accounting
Guided by a financial professional with an intimate understanding of fixed asset accounting,
the objective of this part of the process is to create the maximum financial benefit by correctly
booking the new DCPI assets. Where differentiation can be made between modular,

2
The client’s local Facilities and Financial people should know these numbers for all of the properties in
their portfolio.



scaleable, factory built DCPI such as UPS and PDUs, different asset lives and classes can be
assigned when compared to “fixed in place” portions of the project such as the walls, floors,
ceilings, and fire detection and suppression systems that may be considered building
improvements with entirely different asset lives.

Therefore certain DCPI systems and components may be classified as business equipment,
and may be regarded as “personal property”, entirely distinguishable from “building improve-
ments” or “real property” because business equipment maintains a certain physical and
economic character not specific to its present street address. Moreover, the opportunity
exists to designate the future value of any new DCPI component, by establishing a business-
driven depreciation schedule, and avoiding the creation of stranded assets. The net present
value can then be determined at every point in each asset’s life, and business equipment
(personal property) will have an economic life separate from the real property.

Step 7: Cost segregation
By applying different depreciation rates to different components of a building, a business,
institution, or organization may lower its corporate income taxes and thereby make available
more cash flow. Cost segregation, as practiced by financial professionals with experience in
corporate income tax accounting, is largely an exercise in recognizing and separately
accounting for the costs of 5, 7, 10, 15, and 20 year property from the 30 or 39 year property
classifications. The property in the each of the classifications from 5 to 20 years, in addition
to being properly separated from the 30 or 39 year categories, once properly identified, are
eligible for accelerated depreciation. Accelerated depreciation allows a business, institution,
or organization paying corporate income tax to further increase deductions during the early
life of the equipment.

Businesses, institutions, and organizations that own high technology assets can benefit the
most from employing cost segregation methodology, so long as each asset can pass the so
called function and use test and the inherent permanency test. The function and use test is
intended to determine whether an asset serves any purpose in the operation of the building,
as carefully differentiated from the business conducted within the building. If the asset is
determined not to serve any purpose in the operation of the building, it is then subject to the
inherent permanency test, where ease of removal and the complexity of the removal process
are evaluated. Modular, scaleable, factory built DCPI performing the work or mission of a
business, institution, or organization, routinely pass both tests easily.



Conclusion The impact of tax and tax related asset management strategies on the total cost of ownership
of DCPI can be significant. These savings are entirely separate to gains in energy efficiency
and the cost of maintenance, compared to an old, oversized legacy or traditional UPS
system, with high electrical energy consumption, escalating repair, deferred maintenance,
and real estate costs. Personal property, real estate, and corporate income tax savings, and
tax related savings (such as the tax component of rent) can produce direct financial benefits,
in excess of 20% of the installed cost of a properly sized, installed, and “booked”, factory-built
UPS and PDU solution.

The key to successful implementation of a tax and tax related asset management strategy is
involving a financial professional along with the IT professionals, and facility managers
involved in the deployment of DCPI, and:

1. Consider treating all factory-built DCPI solutions as business equipment
2. Consider declaring factory built DCPI as personal rather than real property
3. Create realistic depreciation schedules
4. Avoid life cycle errors creating stranded asset requiring a “write-down” against earn-
ings
5. Reassess permit and inspection requirements for factory built DCPI
6. Plan for asset portability and asset reassignment; and incorporate tax related savings
including
7. Plan for reduction in construction costs for a dedicated UPS room
8. Lower monthly or annual rents or allocation cost associated with dedicated UPS
rooms, hallways, and common areas required to access the dedicated UPS rooms

Modular, scalable UPS systems, PDUs, and computer room air conditioners have not only
created technological benefits, but provide entirely new DCPI tax and asset management
opportunities with direct and measurable financial benefits. While this white paper is
intended to highlight these opportunities, its primary message is the benefit of involving a tax
professional in any team planning improvement to a data center or network room DCPI. The
results will be dramatic.

About the author
Barry Rimler is a Senior Data Center Product Applications Engineer for APC by Schneider
Electric. He has over 20 years of fortune 100 company experience as a Facility and Asset
Manager of diverse real estate portfolios consisting of office buildings, data centers and light
industrial space. He is a member of BOMA and the Association for Facility Engineering.



Resources
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APC White Paper Library
whitepapers.apc.com

APC TradeOff Tools™
tools.apc.com

Contact us
For feedback and comments about the content of this white paper:

Data Center Science Center, APC by Schneider Electric
DCSC@Schneider-Electric.com

If you are a customer and have questions specific to your data center project:

Contact your APC by Schneider Electric representative



Appendix: Accelerated depreciation
Glossary of A tax accounting concept and practice whereby a qualifying asset’s depreciation schedule is
designed to allow more depreciation to occur in the early years of asset life, than in the later
terms years.

Appraiser
A government official or contractor, working or providing services to a taxing authority,
intended to determine the value of real and personal property.

Assessment Percentage
A percentage of the appraised value of taxable property, adopted by a taxing authority, on
which the tax will be levied. (For example, an assessment percentage of 70% would
communicate that the mil rate would be applied to 70% of the appraised value of the property
to compute taxation.)

Assessor
A government official, usually attached to a taxing authority, who performs the statutory
responsibility of implementing real and personal property taxation.

Business Equipment
Assets in the form of machinery and equipment involved in the function of an enterprise. Also
referred to, for tax purposes, as personal property.

Capacity and Standby Losses
A reference to low operating efficiencies, common to large or obsolete UPS systems,
operating at a fraction of their rated capacity.

Cost Segregation
A concept closely related to corporate income tax accounting, which is designed to analyze
business and construction costs for the purpose of separating individual costs into specific
categories and depreciation lives for the purpose of utilizing accelerated depreciation
methods to lower income tax liabilities.

Depreciation Schedule
An accounting vehicle to communicate and display the decline in value of assets.

Depreciation
The reduction or loss in value of property, usually personal property, as the property pro-
gresses through its useful life. (For example, a computer is worth less as it ages chronologi-
cally and technologically. Depreciation expresses a pre-determined loss of value, over a
specified time period.)



Discount Rate
A certain interest rate that is used to bring a series of future cash flows to their present value
in order to state them in current, or today's, dollars. Use of a discount rate removes the time
value of money from future cash flows.

Fixed Asset Accounting
The practice of maintaining financial records of property (real property and personal property)
owned by a business, institution, or organization solely for the purpose of operating that
business, institution, or organization.

Fixed Assets
Property that may include business equipment or real estate that is held for business use and
is not expected to be converted to cash in the current (or upcoming) fiscal year.

GAAP
Generally Accepted Accounting Principles are a common set of accounting principles,
standards and procedures. GAAP is a combination of authoritative standards and the
accepted ways of doing accounting. The Financial Accounting Standards Board (FASB) sets
GAAP in the United States. The Canadian Institute of Chartered Accountants (CICA) sets
GAAP in Canada. Differences in GAAP in Canada, Chile, Mexico and the United States, for
instance, are typically addressed by the Committee for Cooperation on Financial Reporting
Matters.

Mil Rate
A unit of property taxation expressed as dollars of tax per thousand dollars of assessed
value. (For example, a mil rate of “32 mils” would indicate tax in the amount of $32 for every
$1,000 or assessed value.)

Net Present Value
A statement of the value of a series of future payments or a future amount, with the time
value of money removed. (Net present value is calculated with the help of a discount rate,
which is functional equivalent of interest, though in reverse.)

Personal Property
Any individual piece or group of short-life assets generally including equipment, machinery,
vehicles, and tools.

Real Property
Any individual or group of long-life assets including land, buildings, and improvements to the
land and buildings.



Rent (components)
Rent components when applied to offices and data centers generally include taxes, insur-
ance, maintenance, cleaning and grounds, security, energy, depreciation (or some form of
debt service in lieu of depreciation), and common area expenses.

Stranded Assets
A term applied to fixed assets that are either undepreciated and slated for retire-
ment/disposal, (or in the case of certain regulated industries, fixed assets that are denied
further debt service support, through the public rate making process).

Write Down
The act of converting the undepreciated value of a fixed asset to an expense or “charge
against earnings”. (For example a Legacy UPS that is being depreciated for 30 years will
face a write-down of 50% of it’s original value if it is retired from service and scrapped at the
end of its 15th year. The remaining fixed asset value is charged against the business’s
earning in the year of retirement.)


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