Disposal of Arriva vehicles

[EDB325]

RE: Disposal of Arriva vehicles

(07/07/2020 05:00)Rick Hunter Wrote:  The price of scrap goes up and down so the price paid for scrap vehicles varies from time to time. Scrap price for a decker is around £1000 to £1200 and slightly less for a single decker. As has been mentioned from the time a bus enters the fleet it's value depreciates over time to a residual value on the books, nominally around the scrap value. However if a vehicle has a major unit change, repaint or retrim then the value will be increased to reflect the cost. If you were to check the maintenance records for many of the long term withdrawn vehicles you are likely to find they had major expenditure on them in their final year or years of service. To outsiders they are looked on as scrap due to their age, but in the eyes of the company accountants they have a larger value. As the value goes down over time, some companies per month, some per quarter, then eventually the time will come when the value will be such that the scrap price will be accepted.

"In the eyes of the company accountants" sums the issue up rather well Rick. We've all visited smaller operators over the years and found a yard full of vehicles in advanced stages of decay, and which will clearly never go back into service. Why haven't they been sold for scrap ? Because they're still on the books as an "asset", and that can be an advantage for tax purposes rather than receiving an amount in cash for scrap, which could actually be less than the book value.

[iMarkeh]

RE: Disposal of Arriva vehicles

(07/07/2020 09:14)EDB325 Wrote:  "In the eyes of the company accountants" sums the issue up rather well Rick. We've all visited smaller operators over the years and found a yard full of vehicles in advanced stages of decay, and which will clearly never go back into service. Why haven't they been sold for scrap ? Because they're still on the books as an "asset", and that can be an advantage for tax purposes rather than receiving an amount in cash for scrap, which could actually be less than the book value.

Right ok, this is making more sense to me. I stand by my point that it's strange many (of course some companies do) other companies don't do this and tend to rid the bus after a few months of official 'withdrawal from service'.

Thanks for the additional explanation.