MOD accounting practices
I was intrigued at the £1.3m valuation of the RAF's Hercules mentioned at your article in Accountancy Age (MoD urged to revise procedures). Was this judged at cost, book value, market value or replacement cost?
In another life before picking up the auditor’s quill, I was one of the RAF’s pilots charged with the task of collecting one of 66 or so new Hercules aircraft (not ‘warplane’) direct from the production line at Lockheeds in Marietta, USA in 1967 and flying it ‘over the pond’ to Cambridge for UK modifications before it entered RAF service. At that time it was rumoured each new Hercules was bought from the US Air Force at a cost to the UK government of US$1.2m in a monumentally discounted job lot.
Today’s replacement price would be in the order of US$15m to US$18m depending on the ‘optional extras’ although the old model has now been superseded. Plenty of Hercules on the second hand market though but the price would be a lot more than £1.3m.