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Condition Based Depreciation (CBD)

A form of depreciation that directly assesses  and measures the run down in service potential of an asset

It is based on an auditable and cost-justified asset renewal plan.  The cost of replacing lost service potential over the next 10-30 years (the exact period depends on the agency and the nature of the assets involved) is expressed as an annuity over the period. That annuity is the depreciation estimate.  CBD is re-estimated on a continuous basis, based on a rolling future period. It is only used for assets which are essentially renewable rather than replaceable, i.e. infrastructure assets.