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Please use this identifier to cite or link to this item: http://purl.umn.edu/137951

Title: Depreciation Rates for Australian Tractors and Headers - Is Machinery Depreciation a Fixed or Variable Cost?
Authors: Tozer, Peter R.
Issue Date: 2005
Abstract: Seven different remaining value functions for tractors and harvesters were estimated using data from advertised prices for used farm equipment. The generalised Box-Cox model was used to nest six of the seven functions. The more complex Box- Cox function explained the data better, but simpler models such as the sum-of-theyears- digits, or double-square root models were no different and were easier to manipulate to estimate depreciation rates and costs. There were up to three components of depreciation, drive-away, age and use related, depending on functional form. Drive-away depreciation is the immediate loss in value of a machine due to purchase, in some models this depreciation was higher than either age or use related depreciation. When drive-away depreciation was treated as a separate cost or when there was no drive-away depreciation, due to functional form, age and use depreciation costs were approximately equal.
URI: http://purl.umn.edu/137951
Institution/Association: Australian Agricultural and Resource Economics Society>2005 Conference (49th), February 9-11, Coff's Harbour, Australia
Total Pages: 14
Collections: 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia

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