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Asset Valuation INSIGHTS

MEDICAL RECORDS: QUANTIFYING OBSOLESCENCE

Over time, certain assets, such as machinery, equipment and other tangible personal property become less valuable. An automobile is a common example of an asset that loses value over time. The loss in value can be due to three forms of obsolescence; physical, functional, and economic. Obsolescence is the process of becoming outdated and no longer used. In the case of an automobile, physical obsolescence may relate to dents and scratches while functional obsolescence may result from obsolete technology embedded in the car, such as a CD player or outdated navigation system. Lastly, economic obsolescence may result from a new model of the car being released in the market.
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Laura E. Anastasio, ASA Attains the CEIV Credential

Porto Leone Consulting, LLC (“PLC”), a full-service independent valuation firm, is pleased to announce that Laura E. Anastasio, ASA is now Certified in Entity and Intangible Valuations (“CEIV”).
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COST SEGREGATION INSIGHTS

COST SEGREGATION STUDIES AND FIXED ASSET RECORD ACCOUNTING: A PERFECT COMBINATION

A Cost Segregation Study (“Study”) is often described as “a tax study to lower federal and state income taxes for newly constructed or acquired buildings and site improvements” or “the reclassification of real property from long-lived property to short-lived property as it applies to the filing of federal and state income taxes”. Did you know, however, that a Cost Segregation Study can be used for other tax and non-tax accounting purposes?
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Machinery & Equipment INSIGHTS

The Complex World of machinery, equipment and the production function

The average passenger automobile has over 30,000 individual parts, a modern 747 has over 6 million parts, and the now retired NASA space shuttle contained over 2.5 million moving parts. It is impossible to calculate the combined labor, materials, logistics, research & development of any one of the above high-tech pieces of equipment. But something as simple as a #2 Yellow Pencil, should be easy to calculate the time, energy and resources to produce such a simple product.

Leonard E. Read in his 1958 essay “I, Pencil: My Family Tree” explains that something as apparently simple as a pencil is in fact the product of a very complex world of machinery, equipment and production function.
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Cost Segregation Insights

PROPER COMPONENT DEPRECIATION OF ACQUIRED REAL PROPERTY

A proper understanding of the depreciation of building components and site improvements of acquired properties is key to developing a qualified cost segregation study and limiting unwanted audit exposure. The IRS Cost Segregation Audit Techniques Guide (IRS Cost Segregation Audit Techniques Guide - Chapter 4 - Principal Elements of a Quality Cost Segregation Study and Report) states that depreciation is property handled by addressing physical deterioration and functional obsolescence.
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Auction Theory, Game Theory, and Appraisal

Three appraisers are lost in the desert! They are wandering through the desert, dying of thirst, when they come across a hiker with one bottle of water to spare! Each appraiser reaches into their pocket to see what they can offer the hiker in exchange for the bottle. Appraiser #1 offers 10 dollars from his pocket, Appraiser #2 offers 50 dollars from his pocket and Appraiser #3 offers a crisp new 100-dollar bill. The hiker yells “Sold to Appraiser #3 for 100 dollars”! Appraiser #3 wins and lives to appraise another day.

This short parable, as funny (or tragic) as it seems, is designed to demonstrate that outcomes of an auction are based on the level of trade in which the auction participant deals. In this parable, the level of trade was three appraisers in the desert dying of thirst. If our Appraiser #3, who lived, was given an assignment to value bottled water at a supermarket, days after returning from the desert, would he value each 12-ounce bottle of water at 100 dollars? The answer of course is “No”. Less dramatic inflations in the real world can be observed based on the needs of the auction participants and/or the type of auction in which they are participating.

This article will examine how auction participants and the way an auction is designed and ran by an auctioneer can deliver higher than expected final bids in auctions. Understanding the behavior of auction participants and how an auction is designed and ran, may help the Appraiser reconsider whether auction data should be used, not used, or adjusted before used in an appraisal assignment.
Read Walter W. O'Connell's full Article Published in the M&TS Journal.

 

COST SEGREGATION INSIGHTS

TAKING THE MYSTERY OUT OF COST SEGREGATION STUDIES

It has been almost 20 years since the landmark case ‘Hospital Corporation of America [HCA] v. Commissioner, 109 TC 21 (1997)’ was resolved, allowing the accelerated depreciation of selected building components and site improvements using the Internal Revenue Service (“IRS” or the “Service”) depreciation schedules. Even after the 1997 tax court ruling allowing commercial property owners to componentize real property improvements to shorter depreciable tax lives, mystery surrounds the process and the studies. “It will trigger an audit!”, some said. Others refused to entertain the thought of a cost segragation study due to the lack of guidance given to tax preparers by the Service. But the number one reason for the reluctance to engage in a study was, and is, a lack of understanding of cost segregation studies by property owners.
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To Trend in Microsoft Excel™, or Forecast in Microsoft Excel™, That is the Question

From time to time there arises a situation in all appraisers’ lives where they find holes in a data set that they would like to use for appraisal assignments. That is to say, when working with tables with a period/time column (x-value) and data column (y-value) there is missing data. This missing data needs to be trended or forecasted to complete the data set for proper use. Or, we just need to forecast possible future outcomes when data is not yet available, for a prospective study.
Read Walter W. O'Connell's full Article Published in the M&TS Journal.

 

The Ideal Pricing Index

It’s time to index some pricing data you were given, or better yet, data you have compiled on your own data. You have decided on the collection method that you are going to use: survey, interview, focus group or, at a bare minimum, obtained data from a reliable and confirmable source. You have remembered to make sure the data is accurate, consistent, precise and most of all without bias.
Read Walter W. O'Connell's full Article Published in the M&TS Journal.

 

PlC Announces Opening of new Philadelphia Office

We are proud to announce the opening of our new office at 1700 Market Street, Suite 1005, Philadelphia, PA 19103. For More information, call us at (215) 807-9990 

 

Plc Welcomes Bradley j. Venisnik, ASA- 1/14

PLC is pleased to announce Bradley J. Venisnik, ASA has joined the firm's Chicago office as Director - Fixed Asset Analytics.  Brad brings 20 years of valuation and consulting experience.  Prior to joining PLC, Brad was a practice leader in a Big 4 valuation practice.

 

Chicago metropolitan new office location Now Open

Our new Chicago office is now open.

233 S. Wacker Drive
84th Floor
Chicago, IL 60606

Tel: (312) 813-7500
Fax: (312) 813-7505

 

Plc Announces New Website - 4/13

PLC is proud to announce the launch of our new website. We are hoping that our new website will be much easier to use than the old website. Feel free to send us any comments you have on the website by contacting us.

 

Our 10 year Anniversary - 10/12

We are pleased to say that as of October of 2012 we have been in business for 10 years.

 

Valuation Considerations of Accounting Standards Codification (ASC) - 1/1/2011 

One of the most significant results of the restructuring of accounting and reporting standards has been the impact on the accounting for business combinations and fair value measurements.- read more...

 

Are You Ready For the FASB Accounting Standards Codification? - 4/1/2010 

The FASB Accounting Standards Codification (“Codification”) was launched on July 1, 2009 and was effective in the third quarter of 2009 for calendar year-end companies (for financial statements ended after September 15, 2009.) - read more...

 

Open-Air Parking Structures – Land Improvement or Building? - 3/1/2010 

There has been much debate over the years concerning open-air parking structures and whether the structure, for depreciation purposes, should be depreciated as 39-year nonresidential real property or 15-year land improvements. - read more...


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