Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

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

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VI. The effect of non-agreement of actual with probable life upon the determination of the depreciation or replacement requirement

Collection:: Economics Books

116 VALUATION, DEPRECIATION AND THE RATE-BASE similar to that which has above been cited as more probable than failure always at the end of the probable life term), the fact remains that in no particular case, no matter how large a plant may be, will there be absolute conformity with any as- sumed law. Consequently figures determined on the basis of any reasonable hypothesis of failures can be used to prepare smoothed-out curves and from such curves, tables for general use can be prepared. It is enough to know for the present that ordinarily it may be assumed that the replacement require- ment of a large number of articles with a probable life of » years should increase progressively year by year to about one ath of the cost of effecting complete replacement of all articles and that this rate of one nth would be reached at about the nth year. Table 7 has been prepared to show for numerous articles, all of which when new have a probable life of ro years, the re- placement requirements on the assumption that failures actu- ally occur according to the hypothesis already explained, and to show their relation to the remaining value, the current amor- tization, and the required annual earnings estimated by the Straight Line and by the Equal Annual Payment methods of procedure, also the remaining investment, the replacement allow- ance, and the required earnings if estimated by the Unlimited Life Method. These methods of procedure, when rates for public utilities are to be fixed, are explained in Chapter IX. Expectancy of an Equivalent Single Article.— When numerous articles are under consideration, it may be desirable to know the expectancy of an equivalent single article, representing the aggregate of all the separate articles, which may be used to simplify the estimates of accrued and current depreciation. If the Straight Line Method of procedure is adopted and if nu- merous articles of the same kind and same individual cost are involved, and if it be assumed that actual life in each case will agree with the estimated probable life, then the expectancy of the equivalent single article will be the average of the remaining ages of the individual articles. But under all other methods of

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