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Long Lived Consumable Asset

How to treat long lived consumable that is essential to production, that is consumed over 18+ years but if extracted it would have lost at least 50% of value. Example;
Original Cost $300K
Once in the machine it becomes 18+ year asset
If extracted it would only be worth 50% or $150K

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

$300k / (machine production capacity per year x 18 years) = cost of asset per unit of production

Reduce asset by unit of production (eventually trickles to COGS)

Deal with loss of value when or if it happens. Value as reduced by actual production.

The only quirk I can think of (currently) is if the machine itself has a shorter useful life....if that is the case, use machine useful life.

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