The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

NATURE OF CAPITAL AND INCOME [Caar. XV CapriTAL Account AT END OF YEAR 1902 Assets Liabilities Factory: . . . . . $200,000 Bonds . . . . . $100,000 Bepair fund . "VW 10,000 Capital and surplus . 200,000 $300,000 : $300,000 INcoME ACCOUNT DURING YEAR 1902 Capital Source Income Outgo Net Factory Product . $40,000 Running ex- penses . . $15,000 + $25,000 Repair fund Investment . 10,000 — 10,000 Bonds Interest . . 5,000 — 5,000 Capital and surplus Dividends . 10,000 - 10,000 $40,000 $40,000 000 Here we see that the value of the plant depreciates by $10,000 as before, but that, to replace the loss, there are $10,000 worth of repair funds invested in, say, stocks and bonds. The consequence of the repair fund is that the value of the assets of the company remains stationary at $300,000 ; the share of this property which falls to the stockholders also remains at a constant level, namely, $200,000; and the stockholders receive dividends of only $10,000 instead of $20,000, having set aside $10,000 to invest in their repair fund. We may suppose that during the next year the depreciation continues and that the factory yields again $25,000, as we saw in § 2. Since its value was only $290,000, the “earnings” of which are only $14,500, it must have depreciated $10,500. Since the repair fund set aside in the previous year has earned 5 per cent, or $500, the accounts for the year 1903 will now be as follows: — CAPITAL ACCOUNT AT BEGINNING OF YEAR 1903 Assets Liabilities Factory. . . . . . $200,000 Bonds. . . . . ., $100,000 Repairfund . . . . 10,000 Capital and surplus . 200,000 $300,000 $300,000

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