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 IX. Possible procedures when the rates for a public service are to be fixed

Collection:: Economics Books

POSSIBLE PROCEDURES IN FIXING RATES 103 “2. When a normal life for a particular item of property has been prescribed for use in determining depreciation, that life must not be departed from unless an investigation of the records of the carrier or actual inspection in the field, or the two com- bined, warrant such departure. In no case shall a remaining service life of an item of property be taken at more than the prescribed normal life. “3. When no normal life is prescribed, the total service life and remaining service life shall be determined from observation of actual conditions and the examination of records and data from reliable sources. “4. Salvage and scrap will be allowed in cases where such values actually exist. Whether allowance shall be made in a given case for salvage or scrap shall be left to the discretion of the member of the Engineering Board. If an allowance is made this fact shall in all cases be stated upon the pricing sheet even though at the time the amount of the allowance cannot be given.” The complex operations involved in applying these rules when rates are to be fixed, is in strong contrast with the simple opera- tions involved in proceeding under the Unlimited Life Method which requires no estimate of accrued depreciation. The Use of Cost Records and Cost of Reproduction New. — The purpose of the valuation of the public utility may be as already stated: a. To fix a sélling price. b. To establish a basis for an issue of securities. ¢. To establish a rate-base. d. To serve as a basis for taxation. The ascertainment of the rate-base is important. By adding to or subtracting from the same, various facts relating to values can be ascertained. It may be possible to determine cost of construction from the cost records. When this can be done, there should be a check by means of estimates of the cost of reconstruction to make certain that the actual reported cost is legitimate and that it does not include too much overhead expense nor too large expenditures for abandoned or discarded items, i.e., for items that were intended for temporary use

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