Rail Depreciation Studies

49 C.F.R. § 1201.4–2

Page 1

4–2 [1201.4–2] Rates of depreciation.
(a) A separate composite annual percentage rate for
each depreciable property account, or a subgroup in
that account, shall be used in computing annual depreciation expenses and accumulated depreciation.
The composite rates shall be based on the results of a
depreciation study performed by each railroad. A
depreciation study shall, in general, contain the following components:
(i) Actuarial or semiactuarial methods for determining service lives for road and equipment
properties;
(ii) Salvage value calculations for road and
equipment properties;
(iii) Accumulated depreciation for each account
or subaccount as appropriate;
(iv) Other factors and related calculations involving the depreciation process; and

and six-year cyclical reviews, but shall submit depreciation studies when requested by the Board. Class III
railroads are not required to submit depreciation
studies.
(e) A separate track depreciation rate shall apply to
each primary property account in each track density
category as provided in Instruction 4–3(d). Track
depreciation rates shall be developed by estimating the
average life based on an acceptable depreciation
methodology, consistently applied, including as an
option the units of production method based on gross
ton-miles per mile of track.
[42 FR 35017, July 7, 1977, as amended at 46 FR
20210, Apr. 3, 1981; 48 FR 7184, Feb. 18, 1983]
SOURCE: 42 FR 35017, July 7, 1977; 52 FR 4321,
Feb. 11, 1987; 61 FR 9113, March 7, 1996; 69 FR
58366, Sept. 30, 2004, unless otherwise noted.
AUTHORITY: 49 U.S.C. 11142 and 11164.
49 C. F. R. § 1201.4–2, 49 CFR § 1201.4–2

(v) A commentary on any adjustments and
judgmental factors used in the study.
(b) Railroads shall submit to the Board for review and
approval a report on depreciation studies and proposed
depreciation rates every three years for equipment
property, and ever six years for road property. Railroads can, however, submit depreciation studies prior
to its scheduled year, in which case a new cycle will
begin.

Current through April 11, 2013; 78 FR 21785
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(c) In computing monthly depreciation charges, the
annual percentage rates shall be applied to the depreciation base as of the first of each month and the results shall be divided by twelve.
(d) Class II railroads are exempt from the three-year

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