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 II. Definitions

Collection:: Economics Books

22 VALUATION, DEPRECIATION AND THE RATE-BASE dents of the early years of its life and by careful attention and replacements of its wearing parts is still rendering first-class service. The value of this pump is not to be written off the books, neither should it be regarded as good as new. Its value is ascertained by determining its probable additional years of use- fulness and the probable cost of replacing it at the end of this term. An irrigation canal usually improves with age. So far as wear and tear is concerned, it has unlimited life. But under the development of extensive areas, the small original canal may in the course of time be superseded. The probable life of this canal, and therefore, too, the annual replacement increment, is estimated on some assumption relating to the rate of this develop- ment. Finally the time comes when the project for a compre- hensive canal system has taken shape and it may reasonably be assumed that within a definite period, five or ten, or some other number of years, the original canal will be superseded; its di- verting dam and its headworks, and perhaps the canal itself, will then be abandoned. The remaining life or expectancy of the canal is at that time only five or ten or some other number of years, as the case may be, and within this time the remaining investment in the canal is the amount under consideration for replacement. Composite Life. — The composite life of a complex plant is that term of years within which the accruing depreciation of all items of which the plant is composed, on the assumption of no replacements, would amount to the cost of the plant. As in the case of articles in classes according to their probable life, so in the case of entire plants, the life thus determined for various types of plants is made an aid in estimating the current de- preciation. Without recourse to the more laborious method of dealing separately with each item of which the plant is made up, it becomes possible if composite life is known to approximate the current depreciation or replacement requirement. Composite Age. — The composite age of a complex plant is that age which it would have to acquire, if treated as a depre- cating unit, to make its accrued depreciation equal to the

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