There are various approaches to calculating capital costs. Agencies need to justify the method used to determine capital costs and depreciation. In general, the approach chosen needs to balance: the costs of • implementing the method chosen; optimising • asset valuations to remove from the asset base facilities or parts of facilities that are not necessary to produce cost recovered products efficiently; accounting • for increases or decreases in the value of the asset over time; and being able • to incorporate changes if feedback
There are various approaches to calculating capital costs. Agencies need to justify the method used to determine capital costs and depreciation. In general, the approach chosen needs to balance: • the costs of implementing the method chosen; • optimising asset valuations to remove from the asset base facilities or parts of facilities that are not necessary to produce cost recovered products efficiently; • accounting for increases or decreases in the value of the asset over time; and • being able to incorporate changes if feedback
Cost_Recovery_Guidelines.docx