# Resource / Financial Details

This dialog allows you to model the economies of scale that may be realised when purchasing equipment, and to specify in detail how the asset should be depreciated over time.

Economies of Scale

A price list is used to model economies of scale, able to capture specific price points for increasing quantities of the Resource. Costs can be specified as total or unit costs, or by applying discount factors, or progressive stepped unit costs or discount factors. The cost for intermediate quantities is calculated by linear interpolation on the equivalent overall cost, that is, linear from zero to the first breakpoint, and also beyond last breakpoint at same gradient as the last segment.

## Type (1)

A choice of the type of Price List to be used for the Resource:

Overall Cost: the cost of the Resource is specified by the Price List as a cumulative total cost (1000, 1800, …)

Overall Unit Cost: the Price List specifies an overall unit cost (10, 9, …)

Overall Discount: the Price List specifies an overall discount factor (0.0, 0.1, …)

Stepped Unit Cost: the Price List specifies one unit cost x up to the first n units, and then a lower rate y up to the next breakpoint o.

Stepped Discount: the Price List specifies one discount factor y1 up to the first n units, and then a lower factor y2 up to the next breakpoint n2.

Default: Overall Cost.

## Price List

An interpolated series specifying a number of cost breakpoints. The Quantity inputs specify the number of units of the Resource, while the Cost inputs specify the corresponding total costs, costs, or discount factors (depending on the Type setting).

Default: none. The default Price List is empty, meaning that it has no influence on the calculation of unit cost.

## Validity

The number of years, including the current period, over which incremental units are summed in order to determine the quantity for pricing purposes.

The incremental cost is the difference between the price read off from the Price List for this total quantity, less the price for the units already installed within the number of years defined by the validity of the Price List.

Default: 1.0.

Depreciation Policy

The number of years over which the capital value of a Resource is written off. This depreciation period must not exceed the Physical Lifetime. This input is only relevant for a Persistent resource.

Default: 0. A special case meaning the Financial Lifetime is equal to the Physical Lifetime.

## Depreciation Rate

The write-off rate for reducing-balance depreciation as a proportion, e.g., 0.25 means 25% of the capital value is written off each year. All the remaining value is written off when a Resource is removed from the network. The depreciation rate may be set to zero or any positive annual rate less than 100%. The default is –1, which is a special value indicating that straight-line depreciation should be used. This input is only meaningful for a persistent resource.

Default: –1.0.

## Depreciation Schedule

A time series specifying how depreciation should be spread over the financial lifetime of a Resource.

Provides an alternative to the Straight Line or Reducing Balance options, and makes it possible to match any non-standard or statutory depreciation methods, such as Modified Accelerated Cost Recovery System (MACRS).

Default: Constant {1.0}. Equivalent to straight-line depreciation.

Calendar Override

Calendar Override provides a way to revise the timing of depreciation when the business life of an asset is re-planned (e.g., availability of a new technology leads to its early replacement). So in Y4 you may wish to bring forward the original depreciation schedule, anticipating an earlier removal by the end of Y5. This Calendar Override applies to all installed ages of equipment: so newer equipment in Y2 will be depreciated more quickly to satisfy the Calendar Override.

## Begin (2)

Specifies the period in which the new depreciation schedule begins. The original depreciation is accelerated so that by the period specified by the End input, the value of the asset reaches zero (or the Residual Value, if any).

Default: Y0.

## End (2)

Specifies the period in which the new depreciation schedule ends The original depreciation is accelerated so that by this time the value of the asset reaches zero (or the Residual Value, if any).

Default: Y0.

## Tangible

A choice governing the accounting classification of a Resource, and the corresponding aggregation of Net Fixed Assets to calculate results for Net Tangible Assets and Net Intangible Assets.

Yes: the Resource is classed as a tangible asset, i.e., a physical entity.

No: the Resource is an intangible asset, such as a capitalised licence fee.

Default: Yes.

## Cost Breakdown (2)

A choice of whether STEM stores the Service allocated cost results broken down by individual contributing Resources.

No: allocated cost results are not stored for this element. If a Service is excluded, no allocations will be available for that Service. If a Resource is excluded, its contribution to any given Service allocation will be hidden.

Yes: allocated cost results are stored.

Default: Yes.