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ARTICLE · 27 MARCH 2015

Saved Expenses: Depreciation On Undamaged Assets

Collins Barrow National Incorporated
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A number of great articles have been written in the past dealing with depreciation as a saved expense in the context of fully destroyed and replaced assets; however, few have written about how to deal with depreciation savings for undamaged assets in a business interruption claim.

CanadaAccounting and Audit
Timothy Zimmerman
Timothy Zimmerman
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An exerpt from Canadian Underwriter, February 2015.
Authored by Timothy Zimmerman, Senior Manager, Litigation Accountaing and Valuation, Collins Barrow.

A number of great articles have been written in the past dealing with depreciation as a saved expense in the context of fully destroyed and replaced assets; however, few have written about how to deal with depreciation savings for undamaged assets in a business interruption claim.

From an accounting perspective, it is generally quite clear that when an asset is destroyed as a result of a peril (i.e. fire or flood) the depreciation on that asset ceases which results in the depreciation expense being saved by the insured. However, what happens when an asset is not damaged? Should depreciation on those assets be considered a saved expense?

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