ASTM E2135-06
(Terminology)Standard Terminology for Property and Asset Management
Standard Terminology for Property and Asset Management
SCOPE
1.1 This terminology covers traditional property management definitions and some of the terms introduced in additional asset management standards that are used most often and considered most important. As new standards are developed, new terms will be added to this terminology in future revisions.
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Designation:E2135–06
Standard Terminology for
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Property and Asset Management
This standard is issued under the fixed designation E2135; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision.Anumber in parentheses indicates the year of last reapproval.A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
1. Scope (3) Rank each inventory type from highest to lowest, based
on annual dollar usage. (4) Classify the inventory asA—the
1.1 This terminology covers traditional property manage-
top20%;B—thenext30%;andC—thelast50%ofdollars
mentdefinitionsandsomeofthetermsintroducedinadditional
usage, respectively. (5) Tag the inventory with its appropri-
asset management standards that are used most often and
ateABC classification and record those classifications in the
considered most important. As new standards are developed,
item inventory master records.
newtermswillbeaddedtothisterminologyinfuturerevisions.
abnormal spoilage—for government accounting under the
2. Terminology FAR, abnormal spoilage may or may not be allowable cost.
If the cost is deemed allowable, the cost would normally be
2.1 Terms and Definitions:
charged consistently with normal spoilage.
abandoned property—property of any type over which the
accelerated cost recovery system (ACRS)—systemofdepre-
rightful owner has relinquished possession and any claim of
ciation for tax purposes mandated by the Economic Recov-
an ownership interest, without assertion of an adverse right
eryAct (ERA) of 1981 and modified by theTax ReformAct
to possession and control by the federal government. This
of1986.Thetypeofpropertydeterminesitsclass.Insteadof
would include property left at a government facility and
providing statutory tables, prescribed methods of deprecia-
unclaimedbytherightfulownerfollowingnoticeofintentto
tion are assigned to each class of property. For 3, 5, 7, and
dispose. This property is a type of seized property.
10 year classed, the relevant depreciation method is the
abandonment—voluntary surrender of property, owned or
200% declining balance method. For 15 and 20 year
leased, without naming a successor as owner or tenant. The
property, the appropriate method is the 150% declining
property will generally revert to a person holding a prior
balance method switching to the straight-line method when
interest or, in cases where no owner is apparent, to the state.
it will yield a larger allowance. For residential rental
abatement—a reduction or cancellation of an assessed tax.
property (27.5 years) and nonresidential real property (31.5
ABC method—inventory management method that catego-
years), the applicable method is the straight-line method. A
rizes items in terms of importance. Thus, more emphasis is
taxpayer may make an irrevocable election to treat all
placed on higher dollar value items (“A”s) than on lesser
propertyinoneoftheclassesunderthestraight-linemethod.
dollar value items (“B”s), while the least important items
Property is statutorily placed in one of the classes. The
(“C”s) receive the least time and attention. Inventory should
purposeofACRSistoencouragemorecapitalinvestmentby
be analyzed frequently when using the ABC method. The
businesses.Itpermitsafasterrecoveryoftheasset’scostand
procedure for ABC analysis follows: (1) Separate finished
thusprovideslargertaxbenefitsintheearlieryears.Seealso
goods into types (chairs of different models, and so on);
modified accelerated cost recovery systems (MACRS).
separate raw materials into types (screws, nuts, and so on).
accelerated depreciation—any method of calculating depre-
(2) Calculate the annual dollar usage for each type of
ciation charges where the charges become progressively
inventory (multiply the unit cost by the expected future
smaller each period. Examples are double-declining-balance
annual usage).
and sum-of-the-years’-digits methods.
accelerated depreciation—method recognizing higher
amounts of depreciation in the earlier years and lower
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This terminology is under the jurisdiction of Committee E53 on Property and
amounts in the later years of a fixed asset’s life. Some
Asset Management and is the direct responsibility of Subcommittee E53.06 on
machines, for example, are more efficient early on and
Terminology.
generate greater service potential; matching dictates higher
Current edition approved Feb. 15, 2006. Published March 2006. Originally
approved in 2001. Last previous edition approved in 2004 as E2135–04. depreciation expense in those years. Over time, depreciation
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E2135–06
expense moves in downward direction and m
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