Is the MRA a suitable method of depreciation?
In DETR’s view, the MRA, based on the annual cost of replacing individual building components as they reach the end of their useful life, is a reliable measure of accounting for the depreciation of council housing. If this view is endorsed by CIPFA/LASAAC, the use of the MRA as a measure of depreciation would become a generally accepted accounting practice, and one, which DETR would expect authorities to adopt. However, Chief Financial Officers may decide to use an alternative method if they considered that the MRA materially misstated the depreciation of their housing assets. As explained in Chapter 10 of the Stock Valuation guidance, further guidance will be issued shortly on accounting for depreciation in the HRA and also on a simple alternative method of calculating depreciation at the global stock level, which may be used to test or replace the MRA.
