Residual Value

BigSky · Post by **BigSky** » Fri Aug 22, 2014 11:42 am

Operating under an assumption that the equipment is in excellent condition, what rate of depreciation do you guys apply to Shopsmith equipment.

A brand new Model 510 sells for something in the neighborhood of $3000 today. If offered along with either a bandsaw or a dust collector, what do you consider to be a reasonable purchase price?

fredsheldon · Post by **fredsheldon** » Fri Aug 22, 2014 11:53 am

$400.00 - $600.00 depending on what's in the box of goodies.

BigSky · Post by **BigSky** » Fri Aug 22, 2014 12:24 pm

fredsheldon wrote:$400.00 - $600.00 depending on what's in the box of goodies.

WOW, Really.

That seems awfully low. Would you sell your Mark V 520 for $600.

rcplaneguy · Post by **rcplaneguy** » Fri Aug 22, 2014 12:41 pm

Age and condition are the big factors. Bearings, belts, broken and missing parts. Rust. Wear and tear. So many are abused and neglected, unfortunately.

Selling a 30 year old 510 like mine for 1/2 of its original purchase price is not such a bad deal.

Most 510s in my area (in really good condition) sell for $1100 if accessories like bandsaw, jointer, and sanding belt are included.

"Wild Bad Bob" · Post by **"Wild Bad Bob"** » Fri Aug 22, 2014 12:46 pm

Its all about supply and demand!!!! And a seller with reasonable expectations, not what a new one sells for.

BigSky · Post by **BigSky** » Fri Aug 22, 2014 12:55 pm

rbursek wrote:Its all about supply and demand!!!! And a seller with reasonable expectations, not what a new one sells for.

Isn't the residual value always based on the original price - depreciation? What do you consider reasonable depreciation? What would you sell your 510 for?

"Wild Bad Bob" · Post by **"Wild Bad Bob"** » Fri Aug 22, 2014 1:11 pm

Dont have a 510,
heres one on CL with a DC.
http://milwaukee.craigslist.org/tls/4615438473.html

davebodner · Post by **davebodner** » Fri Aug 22, 2014 2:24 pm

BigSky wrote:Isn't the residual value always based on the original price - depreciation? What do you consider reasonable depreciation? What would you sell your 510 for?

I think you're trying to make too much of a science about it. There's too large a variability in the supply (both in terms of numbers and in terms of types of items for sale) as well as in demand for there to be a reasonably accurate formula to apply.

Add in low volume, and it gets damn near impossible. Stock prices will be volatile on a low-volume day. It's always a low-volume day for Mark Vs. So, 510s prices will be volatile, too.

Then there's the difference between what you're willing buy a 510 for and what you'd sell a 510 for. You might buy a 510 for $1,000 one day. But, you won't accept that sell price two weeks later. You'd want more. Until 3 years later when you'll be willing to take $500 to get it out of your garage. This is the price variability within one person's mind. Add in everyone else, and it's just a mess.

I know I didn't answer your question, but I'll ask mine, anyway: Why do you ask about residual value and depreciation?

BuckeyeDennis · Post by **BuckeyeDennis** » Fri Aug 22, 2014 2:50 pm

BigSky wrote:Isn't the residual value always based on the original price - depreciation? What do you consider reasonable depreciation? What would you sell your 510 for?

For accounting purposes, that is basically correct. For example, if you have a business, you can write off the depreciation as an expense on your taxes, and the "book value" of the asset is reduced by the same amount. But there are multiple ways to calculate depreciation under generally accepted accounting principles (GAAP), and none of them captures the actual market value of a depreciated asset with any great reliability. If and when you sell the asset, the difference between the book value and the selling price is treated as either income or expense.

Market price is determined by the market, not by an accounting formula.

BigSky · Post by **BigSky** » Fri Aug 22, 2014 2:57 pm

[quote="BuckeyeDennis"]For accounting purposes, that is basically correct. For example, if you have a business, you can write off the depreciation as an expense on your taxes, and the "book value" of the asset is reduced by the same amount. But there are multiple ways to calculate depreciation under generally accepted accounting principles (GAAP), and none of them captures the actual market value of a depreciated asset with any great reliability. If and when you sell the as
set, the difference between the book value and the selling price is treated as either income or expense.

Market price is determined by the market, not by an accounting formula. ]Thank you for that clarification. I guess what I was asking was simply how much is someone likely to give me for my saw and the answer is who knows. I am sorry I asked.