Useful Life of Facility Determination

The Rural Utilities Service (RUS) is changing the requirement to use depreciation rates for determining loan terms. Depreciation rates contain other variables such as cost of removal and salvage value which preclude using these rates to determine useful life of a facility when these other variables are unknown. RUS depreciation requirements for financial statement purposes remain in effect. If the proposed useful life of a facility is deemed inappropriate by RUS, other means to establish an appropriate term for the loan will apply. Current reliance solely on depreciation rates has been determined to not be as appropriate as looking at proposals on a case- by-case basis. This rule is made as part of the RUS efforts to continually look for ways to streamline lending requirements and make regulations useful and direct.